Investment Outlook 2025
Pushing the Boundaries
Our Investment Outlook covers all the big issues facing investors, from US economic policy and AI investing, to portfolio diversification, Chinese stimulus and European equity valuations.
We bring you the latest Market Insights from our teams around the world.
Former Federal Reserve (Fed) Chair Janet Yellen described the first episode of balance sheet drawdown from 2017-2019 to be “like watching paint dry”.
Today’s economic environment differs meaningfully from 2018—while the inflation heatwave is mostly past us, its embers are still alive.
This paper addresses the current market stability and investor confidence in the U.S. debt situation keeping in mind the long-term risks, and the investment implications.
In 2018, the U.S. corporate tax rate was slashed from 35% to 21% when the 2017 Tax Cuts and Jobs Act (TCJA) went into effect. On the campaign trail, President-elect Trump proposed a further reduction from 21% to 15%, specifying this would apply to companies that make their products in America.
This paper discusses the strength of the U.S. dollar since September, driven by higher U.S. Treasury yields and President-elect Trump's policy stance, and the investment implications.
This paper, written by Meera Pandit, discusses the Federal Open Market Committee's decision to lower the federal funds rate by 25 basis points to a target range of 4.50%-4.75%, and the investment implications.
In its penultimate meeting of 2024, the Federal Open Market Committee (FOMC) unanimously voted to lower the federal funds rate by 25 basis points to a target range of 4.50%-4.75%.
This paper, written by David Kelly, Gabriela Santos and Stephanie Aliaga, discusses the potential Republican sweep in the U.S. elections, and the investment implications.
This paper addresses the stabilization of S&P 500 earnings in the U.S. on the back of normalizing in growth and inflation, and the investment implications.
From COVID stress, to a blowout recovery, to an earnings recession, to prodigious growth from the biggest names in Tech, earnings have been through a lot these past few years. But as growth and inflation normalize, so too should earnings.
Since the Fed’s jumbo 50 basis point rate cut in September, U.S. 2-year and 10-year Treasury yield have risen by 54bps and 59bps to 4.15% and 4.29%, respectively.
This paper discusses the consumption outlook and the related impact of the policy stimulus in China from the lens of Chinese households' balance sheets and their vulnerabilities.
With the U.S. elections just a week away and polls indicating a tight race, investors are closely assessing potential impacts for currency markets.
Uncover the challenges and opportunities shaping Europe's economic future.
If the U.S. economy were a pop star, it might be peak Taylor Swift. On nearly every major measure of economic health, the economy is in great shape and far ahead of its developed market peers.
Housing inventories remain near record lows, yet builders are not increasing construction volumes enough to sufficiently meet demand. Why aren't builders ramping up activity?
This paper, written by Chaoping Zhu, discusses the stimulus measures adopted by Chinese policy makers in response to deflationary risks, and the need for clearer future plans amid economic uncertainties.
The combination of the stimulus announcement plus cheap valuations and underweight positions resulted in a surge in net flows into Chinese equities summing up to $12.7 billion from September 24th to October 14th.
The American consumer has been resilient in the face of significant headwinds, helping keep the U.S. economy afloat and increasing the likelihood of a "soft landing". However, while aggregate consumption has remained robust, the way the consumer is spending across categories has changed since the start of 2020.
This article addresses the U.S. dollar's varied performance against Asian currencies and factors affecting various currencies' strength.
Explore the UK equity market's potential for recovery. Learn how shifts in corporate behaviour, supportive policies and an economic upswing can help drive demand for UK stocks.
After retracing 8.5% by early August, the S&P 500 had just about fully recovered by the end of the month, and subsequently powered to new highs after the Federal Reserve delivered a jumbo 50 basis point rate cut.
This paper, written by Marcella Chow and Jennifer Qiu, addresses the importance of quality fixed income in a diversified portfolio amid diverse economic and monetary policy landscapes.
This paper addresses the impact of Beijing’s coordinated policies on the recent Chinese equity market rally, and the long-term investment implications.
Chinese equities had a spectacular end to September, with the MSCI China up 21% from September 24th to 30th. The catalyst was the announcement of a series of economic stimulus measures focused on the housing market, domestic consumption, and the stock market.
Explore the fiscal challenges and tough choices facing the UK's new chancellor, Rachel Reeves, as she prepares her first budget.
This paper, written by Tai Hui, addresses the impact of Beijing's coordinated policies on the recent Chinese equity market rally, and the long-term investment implications.
Utilities have traditionally been known for their defensive properties, which makes the combination of robust economic growth, technological excitement and elevated bond yields an unlikely recipe for their outperformance.
Emerging market equities sold off along with other markets in early August. However, they have since rebounded 8%, bringing YTD performance to 11%. While China lags due to ongoing economic challenges, recent developments have sparked a small recovery.
This paper addresses the investment opportunities in ASEAN equities on the back of attractive valuations and robust income generation.
The relative strength and direction of the U.S. dollar matters: trade balances can fluctuate, multinational corporations can see foreign sales rise or fall and U.S. dollar-denominated investors in international markets can see returns amplified or diminished.
In a highly anticipated decision, the FOMC voted to lower the federal funds rate by 50 basis points to a target range of 4.75%-5.00%, a larger-than-expected move and their first move lower since March 2020.
The August CPI report showed further progress in inflation making its way down to 2%, setting the Fed up to begin normalizing monetary policy next week with a quarter point rate cut.
This paper, written by Kerry Craig, discusses the opportunities for investors in real estate markets on the back of expected decline in interest rates and bond yields.
Elevated public market valuations, historically low bond yields and positive stock-bond correlation are all challenges facing the traditional 60/40 portfolio. Moving forward, investors may need to rely on alternative asset allocations to enhance return, income, and diversification in their portfolios.
Understand why the US labour market is cooling and what it means for the economy.
This paper addresses the historical impact of "soft landings" and "hard landings" on asset classes, and how investors can position themselves with Fed rate cuts looming.
“The time has come” was a memorable phrase from Chair Powell’s speech at the Jackson Hole Symposium last week. After a few false dawns this year, Federal Reserve rate cuts are imminent, with the discussion now shifting to how quickly rates will come down.
This paper addresses the flexibility of Asian central banks to cut rates amidst easing inflation and robust recovery in currencies, and the investment implications on Asian equities and fixed income.
This paper addresses the underperformance of the South Korean market despite strong earnings outlook, improving corporate governance and regulatory reforms, and steady macroeconomic outlook.
Explore our article on whether a slowing US economy challenges expectations for corporate earnings.
Markets have largely rebounded from the volatility of the past two weeks. The S&P 500 has recovered 3.0% after a 4.8% decline, U.S. Growth equities have risen 4.3% following a 5.5% drop, and the VIX has settled at 20.7, after spiking to 55.1, its highest level since March 2020.
This paper addresses how China has strengthened its self sufficiency in automobile and technology sectors, and the investment implications.
This paper discusses the 2Q24 U.S. earnings season, with the eagerly anticipated broadening out of earnings growth for the companies outside the Magnificent 7, and the investment implications.
This paper discusses the recent market volatility in the U.S. and Asia on the back of the release of the U.S. July jobs report and latest Federal Reserve commentary, and the investment implications.
Equity markets are defying gravity. From the beginning of 2023 through the first quarter of 2024, despite widespread calls for a recession, the S&P 500 returned 40% with 6% earnings growth.
The Federal Open Market Committee (FOMC) voted to leave the Federal funds rate unchanged at a target range of 5.25%-5.50%, but hinted rate cuts are on the horizon.
This paper discusses the BoJ’s decision to hike rates and reduce the pace of its JGB purchases in its latest policy meeting, and the investment implications.
This paper discusses whether the strength of the rotation into U.S. small caps is premature given weak fundamentals.
This paper discusses the investment implications of the latest economic data release from China and the policy rate cut by the PBoC.
Later this month will mark a year since the last rate hike from the Federal Reserve (Fed). Historically, the end of a hiking cycle should have been an opportune time to extend duration by deploying cash into high quality intermediate fixed income securities.
This paper discusses how improving economic data can convince the BoJ to normalize monetary policy, and help Japan's earnings growth to outpace the U.S. and Europe in 2024-25.
While French politics are somewhat unique, the New Popular Front’s victory is the second win for a left-wing party so far this month after a strong defeat of the Conservatives in the UK.
Looking to the back half of the year and beyond, lingering geopolitical uncertainty and an upcoming U.S. presidential election, coupled with the divergence in performance across assets, underscores the importance of diversification in a fundamentally uncertain world.
This paper discusses how corporate governance reforms in Asian markets can enhance earnings outlook, and the investment implications.
The “Magnificent 7” has massively outperformed the rest of the market, up roughly 30% since the start of the year compared to around 5% for the remaining companies, on AI-related headlines and strong earnings growth.
This paper addresses the concerns over market concentration in the S&P 500, and the investment implications.
Read our latest On the Minds of Investors article to understand what the outcome of the French National Assembly elections could mean for investors.
Markets have a tendency to over appreciate the near term and under appreciate the long term. We think AI will lead to all sorts of business transformation and productivity gains in the long term, but recent performance has been driven by significant upgrades in near-term AI demand projections.
The average homeowners’ insurance policy cost roughly $1,900 in 2023, up over 20% from the previous year and nearly 50% from before the pandemic.
This paper, written by Kerry Craig, highlights the growing significance and potential risks of private credit markets in enhancing returns and diversification.
In the May CPI report, year-over-year headline inflation cooled to 3.3% from 3.4% - down one decimal, yet the median FOMC rate forecast for 2024 moved higher by half a percent.
MORENA party’s candidate, Claudia Sheinbaum, won the Mexican presidential election with a historic margin, receiving 60% of votes. This victory was anticipated, but the scale of left-leaning MORENA's win in Congress was unexpected.
This paper, written by Marcella Chow, highlights the divergence in central bank monetary policies and its investment implications.
In our 2024 Mid-Year Outlook, we address 10 frequently asked questions by investors in the region and beyond. We hope our insights can help you navigate the road ahead, on the way to your investment objectives.
For three years, stock and bond returns have been moving in the same direction. When times are good, this is not thought of as a problem; however, when stocks sell off and bonds are not there to catch them, then investors are faced with an important portfolio construction challenge to solve.
We explore what the UK election means for the economy and markets.
The U.S. is the largest equity market in the world, but its weighting in the MSCI AC World Index exceeds its global equity market weighting and its projected contribution to global GDP in 2023.
Japanese equities are in the spotlight, but investors should be mindful of the risks as well as the opportunities
To understand these shifting dynamics and determine how to embrace this growing asset class, investors should consider: What’s driving the growth of private credit and the decline in high yield and, if private credit deserves a strategic allocation in a broader credit portfolio?
Following the pandemic, median home prices surged by double digits until peaking at the end of 2022. While prices are down roughly 12% since then, home affordability still sits at multi-decade lows.
During the first quarter, U.S. equities shrugged off ever-changing expectations for monetary policy with relative ease, climbing 10.6% despite a sharp hawkish repricing in policy expectations.
At its May meeting, the Federal Open Market Committee (FOMC) voted to leave the Federal funds rate unchanged at a target range of 5.25%-5.50%.
Private equity has been surprisingly resilient throughout the Fed hiking cycle. In 2022, PE only declined by 2%, but is now 3.2% higher than the end of 2021, compared to U.S. small cap stocks, which were 7% lower.
It’s well understood that consumption is the largest contributor to economic growth in the United States accounting for just under 70% of GDP. Therefore, to a large extent, any outlook on the economy hinges on the health of the consumer.
We explore the potential economic and market scenarios stemming from escalating tensions in the Middle East.
Well-positioned investors could take advantage of the new era unfolding in healthcare transformation.
2023’s so-called “everything rally” was confusing to many market watchers, given the pessimistic macro outlook at the beginning of last year. Now, a quarter into 2024, the rally has clearly continued.
The S&P 500 notched 24 new all-time highs in Q1, up 10.6%, with 2.7%-points from earnings, 7.4% from multiple expansion, and 0.4% from dividends.
Investors should focus on EM regions and sectors that benefit from structural, as well cyclical, tailwinds.
As widely anticipated, the Federal Open Market Committee (FOMC) voted to leave the Federal funds rate unchanged at a target range of 5.25%-5.50% at its March meeting.
After a significant pricing reset, private real estate could be on the verge of a rebound due to a few key drivers.
With monetary policy still at the forefront of the macro landscape in 2024, investors are left wondering how the election might influence Fed policymakers.
The S&P 500 has reached a new milestone: crossing 5000. It is up 5.4% year-to-date, compared to the equal weight S&P 500, up just 0.7%.
While recession risks in the US have receded, geopolitical risk, election risk and restrictive monetary policy all threaten the current rally.
As the Year of the Dragon is about to begin in China, investors wonder: Are Chinese equity valuations cheap enough to bring good fortune ahead? What will turn investor sentiment around? Equity valuations already reflect a lot of uncertainty about the short-term and long-term path, suggesting a tactical rebound may be in the cards.
We look at why we think investors should look to diversify their exposure to the magnificent seven US stocks.
At the first Federal Open Market Committee (FOMC) meeting of the year, the FOMC voted to leave the Federal funds rate unchanged at a target range of 5.25%-5.50%.
Markets achieved a trifecta of good news in 2023: an economy that not only avoided recession but reaccelerated, meaningful progress on disinflation, and the Fed pivot markets had been trying to manifest for over a year.
Much has been said about the “Magnificent 7” stocks that dominated market returns last year, ending 2023 up 107% and accounting for around two-thirds of the S&P 500’s performance.
After an impressive equity rally in 2023 and new all-time highs to start 2024, investors are evaluating their equity allocations, which includes where to position along the market cap spectrum.
International equities are likely to benefit this year from positive structural changes, a weaker dollar, and exciting governance changes.
A spike in oil prices could lead to higher prices at the pump, further disrupting the broad disinflationary trend.
Although investors may be tempted to invest based on who they think will win the election and how certain policies may be implemented, macro forces often dwarf policy agendas when it comes to sector performance.
For investors, should fundamentals remain solid we would expect the Fed to begin gradually reducing rates by the middle of this year and for long-term rates to stabilize at current levels, before grinding lower over the balance of the year.
Many investors wonder if they can tweak their existing exposures to be either more defensive against volatility or more opportunistic if certain sectors face future policy tailwinds.
We cannot predict what theme will dominate the markets in 2024, but we can control how we react to positive and negative surprises by having a measured approach to portfolios.
Understand the drivers of small cap valuations and find out why small cap stocks could still offer attractive opportunities for long-term investors.
For investors, large caps may be better insulated from higher rates than small caps, and falling net interest costs can assist decelerating input costs and wages in supporting stabilizing margins.
The big story for U.S. equity markets this year has been the remarkable performance of the largest seven technology stocks or the “magnificent 7.” These handful of stocks account for nearly 100% of S&P 500 YTD returns and are up over 72% this year.
Read about the complex issues at the heart of measuring the financial impact of ESG investing.
Green bonds are attractive instruments for working towards positive environmental benefits. Find out why demand for green bonds from investors is expected to continue to grow.
As we emerge from this pandemic with inflation now rising at its fastest pace since the 1980s, the biggest question for investors is whether some of this inflation will prove “sticky”.
This paper addresses the current market stability and investor confidence in the U.S. debt situation keeping in mind the long-term risks, and the investment implications.
This paper discusses the strength of the U.S. dollar since September, driven by higher U.S. Treasury yields and President-elect Trump's policy stance, and the investment implications.
This paper, written by Meera Pandit, discusses the Federal Open Market Committee's decision to lower the federal funds rate by 25 basis points to a target range of 4.50%-4.75%, and the investment implications.
This paper, written by David Kelly, Gabriela Santos and Stephanie Aliaga, discusses the potential Republican sweep in the U.S. elections, and the investment implications.
This paper addresses the stabilization of S&P 500 earnings in the U.S. on the back of normalizing in growth and inflation, and the investment implications.
This paper discusses the consumption outlook and the related impact of the policy stimulus in China from the lens of Chinese households' balance sheets and their vulnerabilities.
This paper, written by Chaoping Zhu, discusses the stimulus measures adopted by Chinese policy makers in response to deflationary risks, and the need for clearer future plans amid economic uncertainties.
This article addresses the U.S. dollar's varied performance against Asian currencies and factors affecting various currencies' strength.
This paper, written by Marcella Chow and Jennifer Qiu, addresses the importance of quality fixed income in a diversified portfolio amid diverse economic and monetary policy landscapes.
This paper, written by Tai Hui, addresses the impact of Beijing's coordinated policies on the recent Chinese equity market rally, and the long-term investment implications.
This paper addresses the investment opportunities in ASEAN equities on the back of attractive valuations and robust income generation.
This paper summarizes the key highlights from the latest Federal Open Market Committee meeting. (3-min read)
This paper, written by Kerry Craig, discusses the opportunities for investors in real estate markets on the back of expected decline in interest rates and bond yields.
This paper addresses the historical impact of "soft landings" and "hard landings" on asset classes, and how investors can position themselves with Fed rate cuts looming.
This paper addresses the flexibility of Asian central banks to cut rates amidst easing inflation and robust recovery in currencies, and the investment implications on Asian equities and fixed income.
This paper addresses the underperformance of the South Korean market despite strong earnings outlook, improving corporate governance and regulatory reforms, and steady macroeconomic outlook.
This paper addresses how China has strengthened its self sufficiency in automobile and technology sectors, and the investment implications.
This paper discusses the 2Q24 U.S. earnings season, with the eagerly anticipated broadening out of earnings growth for the companies outside the Magnificent 7, and the investment implications.
This paper discusses the recent market volatility in the U.S. and Asia on the back of the release of the U.S. July jobs report and latest Federal Reserve commentary, and the investment implications.
This paper discusses the BoJ’s decision to hike rates and reduce the pace of its JGB purchases in its latest policy meeting, and the investment implications.
This paper summarizes the key highlights from the latest Federal Open Market Committee meeting. (3-min read)
This paper discusses whether the strength of the rotation into U.S. small caps is premature given weak fundamentals.
This paper discusses the investment implications of the latest economic data release from China and the policy rate cut by the PBoC.
This paper discusses how improving economic data can convince the BoJ to normalize monetary policy, and help Japan's earnings growth to outpace the U.S. and Europe in 2024-25.
This paper discusses how corporate governance reforms in Asian markets can enhance earnings outlook, and the investment implications.
This paper addresses the concerns over market concentration in the S&P 500, and the investment implications.
This paper discusses trade tensions and the recent tariff impositions on China, and the investment implications.
This paper, written by Kerry Craig, highlights the growing significance and potential risks of private credit markets in enhancing returns and diversification.
This paper summarizes the key highlights from the latest Federal Open Market Committee meeting. (3-min read)
This paper, written by Marcella Chow, highlights the divergence in central bank monetary policies and its investment implications.
In our 2024 Mid-Year Outlook, we address 10 frequently asked questions by investors in the region and beyond. We hope our insights can help you navigate the road ahead, on the way to your investment objectives.
This paper discusses the election results in India, and the investment implications of short-term valuation challenges and long-term positive prospects.
This paper, written by Raisah Rasid and Jennifer Qiu, discusses why investors should take an active approach towards Asian equities in mitigating currency risks.
This paper, written by Dr. David Kelly and Jennifer Qiu, discusses investment implications of rising U.S. federal debt and widening deficits.
This paper discusses why U.S. 1Q24 earnings have been better than expected, and broadening profit growth should present opportunities outside of the Magnificent 7.
This paper discusses the broader outlook for inflation and the labor market, following the April jobs report in the U.S.
This paper, written by Marcella Chow, discusses the recent surges in gold and copper, and why commodity strategies can help protect portfolios when both stocks and bonds are correcting.
This paper discusses the expected delay in the Federal Reserve's rate cut cycle, and when the current wave of volatility could eventually subside.
This paper addresses the latest Chinese economic data and the factors that may contribute to China markets trending higher.
This paper discusses the relative valuation of European equities, and the factors that could suggest a more constructive outlook for the region's equity market.
This paper, written by Kerry Craig, addresses the current performance and outlook of private equity market with subdued exit activity.
This paper, written by Tai Hui, addresses why policy easing amid a soft landing backdrop should be positive for both equities and fixed income.
This paper addresses why strong and consistent earnings growth, structural reforms and the likelihood of political continuity further enhances India's appeal in spite of rich valuations.
This paper, written by Tai Hui and Adrian Tong, discusses the key highlights of the Bank of Japan's March monetary policy meeting and what it means for the economy.
This paper discusses the macro factors in emerging markets that can drive a potential market rally once the Fed starts to cut and the U.S. dollar turns.
This paper summarizes the key objectives set out in the government work report at China’s National People’s Congress, which were broadly in line with expectations.
Continued demand for AI technologies from mega-cap companies should benefit Asian exporters that are involved in the regional tech supply chains.
This paper, written by Tai Hui discusses why Japanese equities could remain strong despite the potential tightening in monetary policy.
This paper, written by Meera Pandit and Jennifer Qiu, discusses how quality balance sheets and margins continue to support U.S. large caps in spite of favorable small cap valuations.
While recession risks in the US have receded, geopolitical risk, election risk and restrictive monetary policy all threaten the current rally.
This paper, written by Tai Hui and Jennifer Qiu, addresses the history of monetary easing and our expectations of Fed policy in 2024. (6-minute read)
This paper, written by Raisah Rasid, discusses the expected weakening of the U.S. dollar and the inflation deceleration in Asia, which presents an opportunity in Asia fixed income
This paper, written by Chaoping Zhu, discusses the recent Chinese economic data releases and the investment implications.
This paper, written by Marcella Chow and Adrian Tong, discusses the outlook for Asia high dividend equities in 2024.
This paper, written by Tai Hui, summarizes the factors that could trigger rate cuts and policy outlook with its investment implications. (3-minute read)
This paper, written by Tilmann Galler and Natasha May, discusses the outlook of small cap stocks and the investment implications.
This paper, written by Chaoping Zhu and Marcella Chow, discusses the outlook of China and policy implications.
This paper, written by Raisah Rasid and Adrian Tong, discusses the outlook of Asia tech and the investment implications.
A forced and rapid energy transition is under way. Discover what impact this will have on commodity markets and clean energy investment opportunities.
Our principle six time-tested strategies for guiding investors and their portfolios through today's challenging markets to reach tomorrow's goals.
Uncover the challenges and opportunities shaping Europe's economic future.
Explore the UK equity market's potential for recovery. Learn how shifts in corporate behaviour, supportive policies and an economic upswing can help drive demand for UK stocks.
This paper addresses the impact of Beijing’s coordinated policies on the recent Chinese equity market rally, and the long-term investment implications.
Explore the fiscal challenges and tough choices facing the UK's new chancellor, Rachel Reeves, as she prepares her first budget.
Explore our article on whether a slowing US economy challenges expectations for corporate earnings.
We explore what the UK election means for the economy and markets.
Europe has made structural improvements and we think investors should sit up and take notice.
Understand the drivers of small cap valuations and find out why small cap stocks could still offer attractive opportunities for long-term investors.
Green bonds are attractive instruments for working towards positive environmental benefits. Find out why demand for green bonds from investors is expected to continue to grow.
A forced and rapid energy transition is under way. Discover what impact this will have on commodity markets and clean energy investment opportunities.
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