US asset manager PineBridge Investments has just published its latest insights on the multi-asset, equity and fixed income outlook for 2025.

Rob Hinchliffe, portfolio manager, head of global sector cluster research at PineBridge Investments, believes that 2025 could be a year of relative clarity in global equity markets. “The resolution of the US election and other key global elections has removed some critical policy question marks that had hampered investment, and pandemic-era shifts in supply chains have now solidified into a new post-Covid normal,” Hinchliffe said in a note.

"European equity investors continue to digest what Trump’s win will mean for stock markets – most notably, his across-the-board tariff proposals and the indirect hit from higher tariffs on China – though markets appear more focused on central bank policy in the region,” he added.

Under Trump, Hinchliffe expects deregulation, lower taxes, and a potential relaxing of anti-trust regulation to offer clear benefits to banks. Indeed, bank stocks have already rallied strongly since the news of Trump’s win.

US industrials in particular will likely benefit from Trump’s “Made in America” policy leanings, and the overweight to industrials that he had favorued could provide a rare opportunity over the next year. Other wealth managers, such as Northern Trust Asset Management, UBS Global Wealth Management, Pictet Asset Management and Goldman Sachs Asset Management, also favour US equities in 2025. See more commentary here.

“While Trump’s win is supportive of US industrials, it is a net negative for industrials in the rest of the world – and his clear protectionist stance on tariffs and trade will likely pose particular challenges for companies in China and Mexico,” Hinchliffe continued.

“A 60 per cent tariff on Chinese exports would have a material impact on China’s GDP, though the impact on Chinese equity markets could be limited, given that only a small percentage of corporate revenue for listed Chinese stocks is tied to exports to the US,” he said.

“Outside of China and Mexico, in Taiwan, upbeat guidance and a strong third quarter boosted sentiment in Taiwan semiconductors and eased concerns about demand. In India, we’ve seen cooling in high-ticket discretionary purchases such as cars and travel and lodging,” Hinchliffe added. “At the same time, global demand for IT services seems to have reached a bottom, and management commentary has now turned cautiously optimistic. We believe emerging market financials still look attractive.” 

Hinchliffe thinks key long-term structural trends – including innovations in technology and healthcare, increasing automation, and rising net-zero and green spending, along with the ongoing near-shoring movement – remain key factors to consider when assessing companies’ potential over time. “Artificial intelligence remains a powerful driver for quality businesses and products, though concerns have emerged about concentration risk and overheated valuations, along with the potential for a turn in sentiment,” he added.

Fixed income
Global head of credit and fixed income, co-head of leveraged finance at PineBridge Investments, Steven Oh's base case has been that a rare non-recessionary rate-cutting cycle that should support credit performance in 2025 is being entered, particularly for leveraged finance assets. “The US election’s red-sweep outcome will add to pro-growth policies and further support risk assets from a fundamental perspective, while introducing potential headwinds outside the US amid more restrictive trade policies,” Oh said.

“The stimulative fiscal policies will add to near-term inflationary pressures, resulting in a less accommodative US Federal Reserve and yield curves remaining at recently elevated levels – with the “kinked” curve persisting through 2025. By contrast, the weaker economic outlook for Europe will allow the European Central Bank (ECB) to cut rates at a steady pace. The net outcome should bolster a stronger US dollar,” he added.

Offsetting positive fundamentals are extremely tight valuations, which fully reflect hyper-bullish sentiment. Oh therefore sees a benefit in being “centrist” and balanced in portfolio risk positioning, moving closer to neutral to the benchmark while still targeting security selection to take advantage of divergent prospects among issuers.

“High yield bond defaults have already peaked in the current cycle and are expected to decline, while leveraged loan defaults, including liability management exercises (LMEs), should remain near historical averages,” Oh said.

In investment grade credit and rates, Oh expects any short-term weakness to create buying opportunities. He remains bullish on mortgage-backed security (MBS) valuations relative to investment grade (IG) credit. He views emerging market debt as a source of diversification but does not think valuations are especially cheap. China, emerging markets (particularly Mexico), and even Europe could be dragged into trade policy challenges under the coming “America first” regime, but resulting selloffs are more likely to be buying opportunities for adjacent regional credit assets, such as broader Asia investment grade or high yield bonds, as well as broader emerging market investment grade credit relative to developed market IG.

Multi-assets
While US president-elect Donald Trump’s tariff, immigration, and tax proposals are billed as “run hot” policies, with a focus on their inflationary impact, there is also a brash pro-business and pro-supply-side bent to other areas of policy – which means that the year ahead is likely to be a tug-of-war between these inflationary populist measures and other disinflationary pro-business supply-led forces, Michael Kelly, global head of multi-assets at PineBridge Investments, said.

“In equities, as growth picks up in the latter half of 2025, promising sectors include US large banks and US mid-caps, along with equities in the UK and Taiwan, which are joining core investments in structural growth areas such as productivity enhancements, new energy initiatives, US quality stocks, and the Indian market,” Kelly added.

“In fixed income, US credit spreads are tight across the board, but exceptions can still be found in Asia’s high yield bond market, excluding China’s property sector and, to a lesser extent, in US mortgage-backed securities. Both maintain typical spreads in an otherwise tight market,” Kelly added.

“China’s efforts to reduce dependency on the US dollar by shifting its reserves from US Treasuries to gold, along with the People’s Bank of China’s tactics to stabilise the renminbi, are reinforcing gold’s role in international markets. Additionally, as economic ties weaken and geopolitical risks mount, gold is serving an increased role as a strategic hedge,” he said.