Outlook 2025: Siegfried Kok (OBAM)
This text was originally written in Dutch
By Siegfried Kok, Senior Portfolio Manager, OBAM
Where are the biggest opportunities and threats for 2025?
'With Trump 2.0, one thing is certain: it will be another volatile year for equity markets. The themes of inflation, central bank (interest rate) policy and the rise of Artificial Intelligence (AI) have been dominant in recent years. In the process, the Magnificent 7 companies pulled up the US stock market.
The market's focus may well start to shift in 2025 to what the economic and geopolitical effects of Trump 2.0 will bring. From a macroeconomic perspective, this could include the already large US budget deficit and debt mountain. This could keep (long-term) capital market interest rates at higher levels, possibly also because Donald Trump's policies could become inflationary through import tariffs, among other things. A potentially stronger US dollar and said import tariffs could be negative for (exporting) emerging markets.
On the other hand, several positive effects can also be imagined, such as a lower tax rate, fewer laws and regulations, and Trump's policies are generally pro-business. Sectors such as financial institutions and industrial companies in automation and electrification (due to reshoring) may benefit. There will also start to be a renewed focus on companies with pricing power when inflationary pressures arise again based on import tariffs.
However, we do expect developments around AI to remain a key theme. More and more companies will increasingly benefit from this in terms of efficiency and productivity. In the special case that Trump also manages to resolve the current geopolitical tensions, Trump 2.0 could create positive sentiment in equity markets.'
It will be another volatile year for equity markets.