The global investment landscape looks set to enter a period of divergence as the return of a Trump administration in the US sets the tone for the year ahead.
What does it all mean for investors?
Leonie McCann, Head of Client Investment Solutions, with Irish Life Investment Managers discusses the investment outlook for 2025.
A second Trump administration will offer opportunities and challenges: Where are the standout opportunities?
We expect to see positive, healthy global growth next year and further upside potential in markets. Under the hood though, we do expect to see divergence across regions, so we see more opportunities in the US and that's really led by that America first agenda.
I think we'll see continued US dominance as tax cuts and deregulation are good for US companies. On the other hand, regions outside the US could be impacted by tariffs.
Will the polices be more moderate than have been articulated by Mr Trump? Is his bark worse than his bite?
I think his bark is worse than his bite. Will we see tariffs? Yes. Will we see tariffs at the levels that have been publicised - 10-20% on Europe, 60% on China - I don't think so.
Trump is all about the 'Art of the Deal', he's written a book on it. I think this is an opening gambit for negotiations and we end up somewhere with tariffs, but lower than what has been publicised.
I do think there is some negotiation happening in the background right now, so I don't think tariffs will be as extreme as what we're hearing currently.
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If tariffs are imposed on China, what will that mean from an investors point of view?
I think there are headwinds facing China. China has its own domestic issues right now, particularly in the property sector.
Adding in a trade war and tariffs only exacerbates that, so I do think it is negative for China. I don't think you'll see than 60% tariff on China. It is also to be seen what kind of retaliation or counter action you'll see coming out of China. The government has announced some measures, but they have disappointed the market.
I think they are waiting to see what gets negotiated with Trump, but we would be more positive on the US than China given that outlook.
How can investors strike the right balance?
I think in 2025 we are going to be in an environment where there is greater polarisation in terms of political and economic policy globally. With that comes more volatility. I think we're going to see more volatility in markets than maybe we have in the last couple of years.
In order to navigate that, I think it comes increasingly important for investors to maintain a longer term focus to help see through some of that market noise, but importantly maintain a diversified approach and not relying on one single region or one single asset class.
