According to Goldman Sachs, investors betting on continuing dollar weakness should consider US technology and energy stock among those high international sales that tend to outperform when currency falls.
Shares of US firms with high exposure of revenue to Europe and BRICS, also fare well in weaker dollar environment, wrote strategists including David Kostin. Goldman’s FX strategists see the trade weighted dollar depreciating by more than 5% over next 12 months.
During months when the trade-weighted dollar fell by at least 1.25%, the international-facing information technology and energy sectors have performed best while the more domestic-facing consumer discretionary sector has performed worst,When the dollar weakens, investors should favour firms with a larger share of revenues generated abroad.
A weakening U.S. dollar has historically been the biggest catalyst for foreign investor demand for U.S. stock.
Wrote stratergists of Goldman Sachs.
