2025 Asia Economic and Investment Outlook

Our Cross Asset Research team has shared their new year outlook for Asia’s economy and investment, including a soft landing of US economy, a stabilising Chinese earnings cycle, and the pricing of Trumponomics.

(left to right) Frank BENZIMRA, Head of Asia Equity Strategy and Multi-Asset Strategist ; Michelle LAM, Greater China Economist ; Kiyong SEONG, Lead Asia Macro Strategist

Macroeconomic Outlook

• Trump 2.0 remains the biggest uncertainty and we expect a batch-by-batch approach for China and a threat-and-negotiate approach for the other markets. The impact is likely to be painful for China, but not unmanageable. For others, the initial hit is more likely to stem from uncertainty, while in the long term, there should be gains from trade reshuffling.
• China’s economic outlook is clouded by tariff uncertainty and policy stimulus. Better late than never, policymakers are embarking on the right policies to address deflation. More convincing policies are remained to be seen especially in terms of boosting consumption and stabilising the property sector.
• Elsewhere, we expect positive wage dynamics to sustain in Japan, allowing policy normalization from Bank of Japan. Growth of India, Korea and Taiwan will likely moderate on softer capex and normalising exports.

For more information, click here to read the latest report “The Minor Moderation – At risk of being trumped”: https://doc.sgmarkets.com/en/1/0/64721/326645.html?sid=84935efb46a468d05d33e7b53ccba571

Asia Equity Market Outlook

• In the coming months, the equity markets look set to be shaped by China (the extent of fiscal support), the US (dollar, trade, diplomacy) and the Bank of Japan (potential catalyst for carry-trade unwinding) policies. The outcome will not necessarily be bearish.
• Signs are emerging that the earnings recovery is broadening beyond AI, which was the 2024 driver. The focus should be on the Chinese earnings cycle. Japan and India are showing signs of moderating, while China is slowly stabilising.
• Equities in China are facing conflicting forces of more supportive policy at home and another trade war. Tariffs could be a trigger for additional fiscal support. The NPC meeting in March will be a key event.

For more information, click here to read the latest report “Ride the storm: stay invested in Chinese equities”:
https://doc.sgmarkets.com/en/3/0/1094190/327124.html?sid=9d4c8c5dd04c6224433853676d15cd5e

Asia FX/Rates Market Outlook

• Trumponomics is only partially priced in, and there is scope for more repricing, particularly from fat tail risks, higher volatility, and sustained higher risk premium.
• Most emerging market currencies are likely to struggle in terms of spot performance by end of first quarter in 2025, with risks skewed asymmetrically to the downside.
• The Chinese yuan will certainly be impacted by Trump’s planned tariffs, and we believe this is not in the price yet.

For more information, click here to read the latest report “America first, so who’s left behind?”: https://doc.sgmarkets.com/en/3/0/1094190/326978.html?sid=2bab807822841be831622dfaeb8c2bba