According to the Zhichun Finance APP, the stock strategy team from the international major bank UBS Group recommends global investors to reduce their holdings in cyclical stocks and suggests focusing on performance growth-oriented defensive stocks (i.e., "growth-oriented defensive stocks"). UBS Group's Chief Global Equity Strategist Andrew Garthwaite stated in a report: "The pricing of cyclical stocks reflects very high global PMI benchmark expectations, and their PE and PB ratios are close to historical highs compared to defensive stocks."

The UBS Group team led by Garthwaite indicated that major bullish news at the cyclical level—such as the Federal Reserve's interest rate cuts, the European Central Bank and Bank of England's interest rate cut cycles, and the Chinese government's fiscal policy expectations—has already been reflected in stock market pricing, and shared concerns about the current market preference for high-risk cyclical stocks over defensive stocks.

"First, the cyclical profit margins in many industries are at historical highs. Additionally, market pricing suggests that profit margins in cyclical industries will remain at 'abnormally high' levels relative to defensive industries, which is not good news for cyclical stocks," stated the UBS Group stock strategy team.

In this latest research report released by UBS Group, it was also mentioned that cyclical stocks seem to be aggressively priced globally, especially with the sharp rise in PMI in Europe, but UBS predicts that the global economic growth rate will slow significantly (from 3.2% in 2024 to 3% in 2025 and 2.7% in 2026). UBS also stated that even the 'exceptional U.S. economy' supported by some investment institutions will see a significant slowdown, likely declining from a 2.7% year-on-year increase in the third quarter to a 1.7% year-on-year increase in the third quarter of next year.

"Furthermore, the adjustment of global stock market earnings tends to be downward rather than upward, with expectations that unfavorable conditions for cyclical industries will occur up to 65% of the time," said the UBS Group team led by Garthwaite.

UBS stated that the steepening trend of the yield curve led by short-term yields, as well as the significantly increased likelihood of a 'soft landing' for the U.S. economy, will support growth-oriented defensive industries, including pharmaceuticals, software, telecommunications, and housewares.

UBS Group also stated that from the perspective of Historical Data, the best time to purchase cyclical Stocks is when the internal volatility of the benchmark Index is very high, because during such times, the performance of cyclical Stocks lags behind more than 83% of the time, or when they show signs of being oversold technically, cyclical Stocks exhibit what is called 'excess return allocation value'.

What is meant by the performance growth type of defensive Stocks favored by UBS Group refers to those that have long-term sustained growth expectations and possess 'defensive characteristics' in a bear market. These companies often have strong resilience to economic pressure, growth potential, and stable financial conditions with relatively low volatility, concentrated in industries such as pharmaceuticals, Medical Devices, essential Consumer goods, retail giants, utilities (mainly Electrical Utilities and Water Affairs), and Cloud Computing giants (such as Microsoft, Amazon, and SAP). UBS Group's Chief Global Equity Strategist, Gareth Watson, listed the following Stocks in a Research Report for investors' stock selection reference.

The defensive Stocks identified by UBS Group that have performance growth potential include large industrial companies, such as Mitsubishi Heavy Industries and BAE Systems; condiment and spice companies, such as Symrise and DSM-Firmenich; medical technology companies, such as Abbott Laboratories and Alcon; transmission and distribution companies, such as E.ON, National Grid of the United Kingdom, PG&E Corp, and Sempra Energy; US companies involved in electricity pricing services and power supply exposure, such as Vistra and Talen Energy; software giants or Saas software companies, such as SAP and Microsoft; retailers, such as the well-known UK food retailer Tesco; and European telecom giants, such as Telenor.

Wall Street bears have almost completely flipped their stance, with only a few Institutions still bearish on US Stocks. Barry Bannister, Chief Investment Strategist at investment institution Stifel, recently stated that by the end of 2025, US Stocks will be lower than current levels, and Stifel can be considered Wall Street's 'last bear'. Bannister wrote in a report to clients recently, 'The current inflation environment seems unfavorable for a sustained stock market frenzy, we prefer some more defensive industries.' He added that a slowdown in economic growth will benefit defensive Stocks, which include a focus on Medical Care, utilities, and essential Consumer Stocks.

Furthermore, although Wall Street investment Institutions generally mention in their Research Reports that the overall trend of US Stocks is expected to continue climbing to set new historical highs next year, the S&P 500 Index may still experience a pullback of around 10% at irregular intervals, as well as a relatively short box consolidation phase. Looking globally, a similar volatile performance may also occur in 2025, and in a volatile environment, growth-type defensive Stocks often significantly outperform the benchmark Large Cap, which is why Institutions like UBS Group and Morgan Stanley are bullish on the performance of US Stocks in 2025 while also favoring defensive nature Stocks. The Morgan Stanley strategy team stated that defensive Stocks usually continue to perform well within 3 to 12 months after the Federal Reserve's first interest rate cut.