Six key themesBY BENOIT ANNE | VOLUME 11, ISSUE 1As investors look to 2025, a number of key themes-from a second Trump administration to record US corporate profitability to widespread adoption of groundbreaking scientific advances-are expected to shape macro and market conditions. Under a second Trump administration, investors expect that the United States will undergo several major policy shifts around trade, tariffs and immigration, to name a few. These shifts will not only have major ramifications for the local macro and market environment but also on the rest of the world. A key feature of the US equity market's strength has been the recent profit margin dynamics. Margins are near historical highs and there is no sign of a major profit margin correction on the horizon. Could corporate America be experiencing a profit margin structural shift? Time will tell, but sometimes too much of a good thing can be bad for markets. One risk to watch is the economy and markets running so hot that a no-landing scenario arises in the US. If that scenario were to take hold, there is a possibility that inflation would resurface as a major macro risk, with broad implications for the policy outlook of the US Federal Reserve. While a no-landing outcome would mean that the US has moved to a higher growth trajectory, it would also imply that market rates may stay higher for longer. Meanwhile, the challenges facing China appear to be very different in nature. China's structural headwinds remain considerable. These include the highly distressed property sector, substantial local government debt burden, elevated deflation risks, systemic overcapacity in the industrial sector and adverse demographics. Aware of these challenges, the Chinese government is trying to revive the economy through a broad policy package, but we remain sceptical that these issues will be effectively addressed. Looking at the global backdrop, we are standing ahead of the great bifurcation, with growth and monetary policies showing increasing signs of divergence, a propitious environment for active global asset managers. Finally, a key sectoral theme we are watching is the advancement of game-changing lifestyle pharmaceuticals (GLP-1s) that may produce a transformational impact extending beyond healthcare. Get articles like this delivered to your email - Sign up for the free monthly newsletter ![]() More Articles |
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On the horizon
PARTNER & PRIVATE WEALTH ADVISER
TOWNSEND COBAIN PTY LTD