Douala: Reflecting on the current economic climate, KGI has put forth its market outlook for 2025, highlighting significant geopolitical and economic factors that could shape the global financial landscape. With the U.S. experiencing a cooling in inflation and labor markets, the balance between employment and inflation is currently stable. However, the re-entry of Donald Trump into the White House is expected to influence global economic trends and affect medium to long-term interest rates. In China, domestic investment confidence is low, and potential U.S. tariff increases could impact Chinese exports, prompting China to implement counteractive measures.

According to Cameroon News Agency, KGI’s proposed ‘ACE’ strategy for 2025 emphasizes diversifying into alternative assets like gold and cryptocurrencies, prioritizing high-rated corporate bonds, and focusing on elite stocks in the U.S. and Japan. Kenny Wen of KGI highlights the importance of asset allocation, advocating for alternatives to mitigate portfoli
o volatility, credit selection for income potential, and a focus on large-cap stocks amidst sector rotations.

The U.S. economy is projected to slow more than market consensus, with the Eurozone and UK showing weaker than expected recoveries. China’s market is closely watching the upcoming Central Economic Work Conference for effective fiscal policies to achieve desired growth rates. Trump’s policies could introduce economic volatility, with tax cuts, tariffs, immigration restrictions, and deregulation posing risks to inflation.

James Chu from KGI Securities Investment Advisory notes that global growth in 2025 may mirror that of 2024, with the U.S. maintaining strength among developed markets despite a downward trend. Trump’s policies are expected to impact inflation and economic stability, with the Federal Reserve potentially adjusting interest rates. U.S. stocks, having been influenced by AI advancements, may provide opportunities through sector rotation, despite expected market volatility.

In China, GDP
growth has lagged behind targets due to economic pressures. The government has implemented monetary policies and debt-swaps to support the economy but lacks significant fiscal stimulus. The outcome of U.S.-China relations, influenced by Trump’s tariff policies, will be crucial for China’s economic performance in 2025. Achieving a 5% growth rate remains challenging amidst structural issues and sluggish employment.

For the Hong Kong stock market, the primary risk in 2025 is the China-U.S. relationship. Despite this, the potential for economic stimulus and market sentiment indicates a possible return of the HSI to 23,200 points, assuming favorable economic conditions and trade relations. Market valuation forecasts a 5.1% EPS growth, with potential upside depending on market dynamics and geopolitical factors.