Details of Standard Chartered’s chief investment office Outlook 2025 report show how investors should position themselves in 2025. The CIO’s views are based on the outcome of the recent US Presidential election, the impact on US domestic economy, and on the wider global economy.

UK-headquartered banking group Standard Chartered highlighted this week that it is overweight in US equities and gold, preferring equities over bonds, and underweight in cash in foundation portfolios at the start of 2025.

The bank is overweight in US equities, as the likelihood of expansionary policies following recent elections, such as potential tax cuts and deregulation, add fresh impetus for US companies, on top of accelerating earnings growth. It sees investment opportunities in US small-caps and US regional banks while closing US healthcare as the sector has been weak. It also expects momentum in the US growth sectors of technology and communication to continue, and financials to benefit from deregulation and a soft landing.

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.

Standard Chartered is underweight in the euro area, with supportive US policy likely to maintain US outperformance. Political uncertainty in France and Germany is also likely to weigh on investor sentiment, adding to tariff concerns in the region. It is downgrading discretionary to underweight as autos face competitive and tariff headwinds, while demand for luxury goods is soft.

The chief investment office (CIO) sees UK equities as a core holding (neutral) with an attractive dividend yield and valuation discount. UK equities offer a defensive sector composition, but the lack of growth sectors could limit outperformance.

Asia
Japan equities are a core holding (neutral) for Standard Chartered. It is encouraged by improving share buybacks and the reflationary environment, although they remain vulnerable to swings in the yen carry trade.

Asia ex-Japan equities are also a core holding (neutral). In Asia, the firm is overweight in Indian equities. India’s return on equity remains strong. Robust domestic inflows and relative insulation from overseas trade tensions lend further tailwinds. The CIO favours large-cap equities rather than small/mid-caps, given their less stretched valuations .

Taiwan equities are a core holding. The lender is underweight in Korea due to its high vulnerability to US import tariffs and escalating political tensions, which add to rising global trade uncertainties. Standard Chartered views China equities as a core holding. Facing deflationary pressures, China is likely to try and offset US import curbs with higher exports to non-US markets and increased stimulus to boost domestic demand. The firm prefers onshore equities versus their offshore counterparts, as they are likely to be a more direct beneficiary of any positive policy surprises. However, lingering US-China tensions, alongside structural concerns, such as a property sector downturn and deflationary worries are likely to continue to weigh on share price momentum.

In China, the CIO prefers technology, communication and discretionary, which are tied to improving consumption. It is downgrading healthcare to neutral amid intense competition and inventory destocking headwinds. The firm has also upgraded ASEAN to neutral due to increasing foreign direct investments and the likelihood of a positive spillover from China’s policy stimulus.

Within bonds, Standard Chartered is overweight in developed market high yield bonds as the higher yield drives total returns. In Asia, it prefers high yield over investment grade bonds given their domestic exposure and probable support from China’s stimulus measures. Emerging market local currency bonds are most at risk from Trump’s tariff proposals, keeping the firm underweight. The firm is also switching from cash to dollar-based bonds to lock in attractive yields over the longer term.

The CIO sees tactical opportunities in selective US, China and India equity sectors. Bond opportunistic ideas continue to look for pockets of value amid elevated valuations. It also holds an overweight view on gold relative to other major asset classes. Continued robust demand from central banks remains a key driver in its view. While this may have slowed to some degree in late 2024 because of a sharp rise in gold prices, this indicates that central banks are not entirely price-insensitive; the firm expects demand to rebound on pullbacks in the gold price.      

“While it is important to keep abreast with global events and their impact on markets, it is even more important to focus on an investment plan,” Manpreet Gill, chief investment officer of Africa, Middle East and Europe, for Standard Charter’s wealth and retail banking business, said. “Be disciplined, stay invested and don’t try to time the market too much. Ensuring a good diversification in your portfolio, maintaining a foundation portfolio and regularly adding to it when opportunities arise, would help achieve your long-term financial and life goals.”