Thomas Poullaouec, Head of Diversified Asset Solutions for Asia Pacific at Principal, and his team published a latest report indicating that due to loose monetary policies, stimulus measures in China, and the potential for profit growth, Principal continues to maintain a high allocation to stocks. In terms of regional stocks, the firm remains optimistic about US stocks, especially large-cap stocks, as individual high-quality companies are expected to continue driving sustainable profit growth in this category. On the other hand, based on more attractive valuations and potential market expansion, Principal maintains a high allocation to value stocks. Furthermore, in order to manage risks ahead of the US presidential election, Principal strategically reduced its underweight exposure to duration. At the same time, Principal continues to maintain a high allocation to global high-yield bonds, emerging market US dollar sovereign bonds, and Asian credit. Principal stated that when President Trump took office for the first time in 2016, inflation rates were low, central banks around the world kept policy rates near zero to boost inflation. The situation is now vastly different, with inflation just reaching central bank targets, policy rates and bond yields at higher levels, and deficit spending increasing. Principal noted that there have been significant changes in the past 4 years, with many of President Trump's campaign promises, such as increasing tariffs and deregulation, potentially leading to inflation pressures. While policies are expected to undergo major changes, higher inflation and interest rates could serve as balancing factors, maintaining policy discipline. Principal pointed out that while the S&P 500 index continues to show strong profits, it is mainly driven by the "Magnificent 7" stocks, whose performance relative to the overall market reflects this. As spending on artificial intelligence stabilizes, the profits of these shares are starting to slow down from extremely high levels, prompting investors to focus on other companies in the index showing encouraging signs of profit growth. Principal stated that this broadening trend began in the second quarter and continued into the third quarter with better economic growth and support from loose monetary policies. While the trend is encouraging, the profits of related companies have only risen from negative to low single digits, while the "Magnificent 7" stocks are still expected to achieve close to 20% growth. Resilient economic growth, loose monetary policies, and potential fiscal and regulatory policy changes could provide positive factors for companies outside the "Magnificent 7".