Standard Chartered Bank is entering 2025 overweight in equities and gold, as the global economy remains resilient with GDP forecast to grow 3 percent.
The markets will focus on incoming US president-elect Donald Trump’s policies, particularly the balance between pro-business measures, and trade and immigration concerns, the UK-headquartered lender said.
“We are overweight in global equities, supported by positive growth and policy backdrop,” Singapore-based global chief investment officer Steve Brice told a news conference in Taipei on Tuesday.
Photo courtesy of Standard Chartered Bank
While their valuations are high, earnings growth would drive returns, said Brice, who leads a team of over 25 professionals that saw an increase of 16 percent and 13 percent in its growth and balanced strategies respectively last year.
In regional preferences, the firm is overweight in US equities, pointing out that Trump’s electoral win has lifted business confidence through expected tax cuts and deregulation, despite potential tariff impacts.
Brice is forecasting a 45 percent chance of “soft-landing” and a 40 percent chance of “no-landing” in the US economy, with a mounting likelihood of “no landing.”
Brice favors a soft-landing scenario as it indicates a continued slowdown in inflation.
Central bank policies would remain crucial, with the Federal Reserve poised to cut rates to 3.75 percent toward the year-end, looking past temporary inflation from tariffs and immigration policies, Brice said.
Europe and China would debate easing and Japan stands alone in raising rates, he said.
Standard Chartered is underweight in the euro area given the region’s weak growth and trade concerns. Political uncertainty in France and Germany would weigh on investor sentiment, he said.
The firm has mixed views about Asia. It is neutral on China equities, as the economy is waiting for stronger stimulus to come out of the woods.
China would seek to offset US import curbs with higher exports to other markets and augment stimulus to boost domestic demand, Brice said.
Lingering US-China tensions, alongside structural concerns such as a property sector downturn and deflationary worries, would continue to tether share price momentum, he said.
The lender also has a neutral view on Japan equities, as they remain vulnerable to swings in the yen carry trade despite improving share buybacks and the reflationary environment.
However, the firm is overweight in Indian equities as India’s return on equity remains strong on the back of robust domestic inflows and relative insulation from overseas trade tensions, he said.
Standard Chartered Bank is also positive about gold, expecting its price to rise to US$2,900 per ounce in next 12 months, propelled by demand from global central banks and geopolitical risks.
Additionally, the firm is switching from cash to dollar-based bonds to lock in attractive yields over the longer term, Brice said.
Within bonds, Standard Chartered favors developed market high yield bonds, looking at sustained credit quality in a soft-landing scenario, he said. It keeps a neutral stance on other bond categories in light of their elevated valuations.
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