Roundtable participants
Jason Moo, chief executive officer, Bank of Singapore
Young Jin Yee, co-head UBS Global Wealth Management Asia-Pacific and country head, UBS Singapore
Joseph Poon, group head, DBS Private Bank
Kelly Chia, head of investment strategy, UOB Private Bank
Foo Tian Ong, regional head, South-east Asia and Singapore location head, Standard Chartered Global Private Bank
Evonne Tan, head of Barclays Private Bank, Singapore
Moderator: Genevieve Cua, Wealth editor, The Business Times
BT: How should investors navigate the investing terrain in 2025 with the overhang of possibly wide-ranging tariffs from the Trump administration?
Jason Moo: Financial markets will stay volatile while the Trump administration’s policies continue to have contrasting impact on growth in the US and the rest of the world this year. The US outlook is clouded by the new government’s policy twists and turns. The threat of further tariffs globally, crackdowns on immigration in the US and attempts to downsize the federal government may hurt business sentiment, weaken consumer confidence and raise inflation expectations.
Hence, the US equity market could experience a period of near-term consolidation as investors confront these uncertainties. Yet, the outlook still favours US assets as the US economy is likely to experience a soft landing as inflation eases and the Federal Reserve may be able to cut interest rates again this year. US corporates should benefit from sweeping deregulation and fresh tax cuts.
Despite uncertainties, the prospects of tax cuts and deregulation in the US, further stimulus in China and greater spending on defence in Europe should benefit risk assets. We believe that the global growth and earnings outlook appear broadly resilient, which underpins an overall risk-on stance in our tactical asset allocation strategy.
Overall, we are positive on equities, with “overweight” positions in US and Asia ex-Japan equities, and “neutral” positions in Europe and Japan. We believe the US equity market offers exposure to quality companies that benefit from broader tailwinds, such as Trump’s pro-growth policies, ample system liquidity, rising productivity and artificial intelligence (AI) innovation.
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Despite challenges in China’s economic outlook, there are nascent signs that the situation may have bottomed out as Chinese policymakers remain poised for further policy stimulus to support the economy. In the real estate market, the magnitude of price declines has eased in recent months, while total sales value has also turned a corner. In addition, consumer confidence, which has been subdued over the past year, appears to be stabilising.
Young Jin Yee: The US economy is entering a phase of uncertainty and the country’s unemployment rate has stayed low – below 4.3 per cent – for the longest period since the 1970s.
On the potential impact of tariffs, our base case macro scenario is for “growth despite tariffs”, and we still expect US’ gross domestic product to expand by around 2 per cent this year, with two 25-basis-point (bp) rate cuts from the Federal Reserve starting in June.
We believe the regional central banks outside the US will continue along their easing paths. Growth conditions remain generally resilient; regional inflation is low; policy is still being eased; dollar strength should moderate in H2; and some Asian markets boast some of the strongest links to AI outside the US.
Within equities, we currently see the best risk-reward in US equities, AI, and power and resources.
Asia ex-Japan equities have outperformed many global peers year to Mar 19. But the escalation of tariff risks poses a threat, clouding the short-term outlook. A slowdown in US economic indicators could further weaken Asia’s growth outlook. Given the uncertainty, the risk premium for Asian equities is likely to rise, limiting near-term upside.
Taiwan remains our most preferred market in the region. AI capex acceleration supports our positive view on Taiwan Semiconductor Manufacturing Co and the broader market.
India has struggled with a slow economic recovery, earnings downgrades and rotation into China. However, we expect earnings growth to rebound this year to 15-16 per cent (Nifty), maintaining our attractive view on India.
In fixed income, we believe yields on quality bonds are attractive. The relatively high yields today help cushion bonds’ total return outlook.
We still like gold, which remains supported by strong central bank buying and investment demand. Our forecasts point to a gold price of US$3,200 for this year. We also expect silver to do well.
Joseph Poon: In the short term, wide-ranging tariffs are likely to create volatility and uncertainty. However, this effect will not be a universal one. Companies with strong domestic revenue streams and low foreign input would be less affected. Defensive sectors such as healthcare and financials will also hold up better as they stand to benefit from the Trump administration’s disposition towards deregulation, which will also create more favourable financial conditions for mergers and acquisitions activity. At the same time, these sectors will also enjoy structural drivers such as an ageing population.
Meanwhile, sectors that are more dependent on global supply chains such as technology and consumer discretionary may face cost pressures and supply chain disruptions.
However, in the longer term, we remain optimistic over the technology and communication services sectors, with AI being one of the key drivers. As businesses across every sector increasingly integrate AI software and services to optimise operations and reduce costs, these sectors are poised for robust growth.
Kelly Chia: Uncertainty is the only certainty, more so this year than any other. To navigate 2025 amid broader tariffs, investors should focus on resilient, diversified sectors. US domestically oriented companies, particularly in healthcare or waste management, offer stability as they are less exposed to trade disruptions. Select infrastructure and industrials, buoyed by potential government spending, could benefit from tariff-driven reshoring.
We turned positive on China at the start of March as it has its own set of catalysts, ranging from a strong pivot to AI by private companies, strong domestic stimulus support for consumers, and even the backing off from harsh property measures such as price caps. Most importantly, the Feb 17 symposium hosted by President Xi Jinping was a positive U-turn moment for private enterprises.
Gold and precious metals remain attractive as inflation hedges. Finally, fixed income and private assets provide portfolio stability if trade wars dampen growth. A barbell strategy – balancing defensive assets with selective growth – can mitigate tariff uncertainty.
Foo Tian Ong: During periods of heightened volatility in markets, investors should focus on diversification while looking at tactical trades to take advantage of short-term opportunities.
What’s top of mind for our clients are the tariffs implications on global trade. The unpredictable behaviour of trade policies adds uncertainties while near-term headwinds such as inflationary risk and slowing growth continue to weigh on markets.
In the past two months, risk appetite has waned as the Trump administration’s use of tariffs as a policy tool has become increasingly pronounced. The common belief is that tariffs are primarily a negotiation tool; however, it is prudent to build resilience into their portfolios should tariffs persist long term.
We continue to expect US economic growth to slow but remain positive. This will translate into continued outperformance of equities over bonds and cash. Nonetheless, clients need to be prepared for bouts of volatility, especially in the near term.
Significant changes in European fiscal plans and the development of China AI technology have boosted European and Chinese equities. Relatively low valuations should keep them supported; thus, selective opportunities remain, and we advocate adding tactical positions on pullbacks.
Asset allocation and diversification are key during periods of elevated market volatility to achieve long-term investment goals. Alternatives such as private markets and hedge funds can help dampen volatility and lead to better risk-adjusted returns.
Evonne Tan: In the face of increased uncertainty and volatility in 2025, two key principles come to mind. First, investors will need to avoid responding to all incoming headlines. This is particularly true if tariffs are used by the US administration as a negotiating tool. Secondly, investors will need to embrace diversification both at the sector and the geographical level.
It is important to realise that the obvious winners and losers have already seen their share prices move in anticipation of tariffs. Therefore, the real winners and losers will likely be among those that have seen unjustifiable moves. European and Chinese equity markets, both of which have significantly outperformed so far this year, are two great examples of obvious tariffs losers that ended up winners.
Trade policies will also have significant impact on FX markets, with the US dollar likely to emerge stronger as other countries may respond by devaluing their currencies to offset the impact of higher tariffs. We are already seeing many of the emerging currencies such as RMB and MXP come under pressure in recent months.
BT: How significant is DeepSeek in the investment case for AI, and the balance between valuations and growth potential?
Jason Moo: With the emergence of China’s DeepSeek AI model, global investors are realising that China’s technology sector is rapidly developing AI technologies despite sanctions. Thus, we expect significant value creation in China’s technology companies, which are investing heavily in AI research and innovation, and serve the world’s largest consumer market.
This is catalysing a rapid narrowing of the valuation gap between China and US tech stocks. But there is still some way to go, given that China’s technology stocks have significantly underperformed those in the US for an extended period.
Broadly, we see AI use cases focusing on employee productivity, revenue opportunities via customer facing applications, as well as customer experience and engagement. With more cost-efficient large language models such as DeepSeek emerging, we should see greater proliferation of use cases over time.
Also, when incorporating AI-related securities in portfolios, we believe it is important to be nimble in the face of various risks, such as chip export restrictions, cyclicality in aspects of businesses, monetisation strategies and execution capabilities by management teams.
Young Jin Yee: We are confident the AI growth story will continue. Contrary to the general perception on low-cost models, Q4 2024 earnings and forward guidance suggest the near-term threat to AI capex from low-cost models is limited. We have instead revised up our capex estimates and now expect 35 per cent year-on-year growth in Big 4 spending to US$302 billion, driven by strong demand for frontier models.
Potentially lower training and inference costs could also accelerate AI adoption in a growing addressable market, boosting AI monetisation in the medium to longer term.
We think a mix of low-cost and high-cost AI solutions can coexist, serving different demands and use cases. Given strong near-term visibility for tech, we remain bullish on the AI theme, including large-cap names, leading cloud platforms, and semis. We recommend keeping a diversified exposure across all segments of the AI value chain.
In Chinese equities, we like select internet names. Tariff- and export control-related uncertainty may spur more volatility ahead. Investors can take advantage via structured strategies and buying the dip.
Joseph Poon: DeepSeek’s reveal was a key milestone in AI development, as it challenged the incumbent model of “more is more” with its low cost and computing power requirements. However, it is also important to approach this development with a healthy amount of scepticism; claims that the model was trained without the latest GPUs, and at a cost of just US$5 million appears improbable.
For now, we believe that US Big Tech remains in pole position as DeepSeek grapples with issues such as censorship and system stability, which will encumber its roadmap for commercialisation and monetisation.
All in all, DeepSeek’s emergence will likely prompt alternative strategies for AI development and commercialisation, but it does not in any way derail the bullish AI narrative. Increased spending, an ever-expanding addressable market, and constant innovation will continue to drive growth in the AI space. Affirming this trend are announcements by industry heavyweights such as Microsoft and Meta, which have said they would double down and increase AI-related investments.
Kelly Chia: DeepSeek’s emergence as a cost-efficient AI model disrupts the investment case for AI, challenging lofty valuations tied to heavy infrastructure spending. Its open-source, high-performance approach – trained on less advanced chips for under US$6 million (as claimed by DeepSeek) – questions the necessity of continued massive capital expenditure by hyperscalers. Nvidia slumped 16 per cent post-announcement and has struggled since.
However, we are not outright negative on the US mega-tech companies. They continue to be multibillion free-cash-flow generators, which in turn allows them to invest liberally in innovation that will fuel their future growth.
Alibaba, the official AI partner for Apple in China, has also revealed models that are cheap and efficient. This shift pressures semiconductor and data center valuations, potentially redirecting value towards software and adoption-driven firms. That said, DeepSeek appears to be consistently operating at maximum capacity. This shows that scaling for ubiquitous AI still requires more hardware.
Whatever the case, this signals a pivot. Growth potential remains, but valuations should adjust. We would temporarily focus on adaptable tech leaders and undervalued AI adopters over pure-play infrastructure bets.
Foo Tian Ong: The Chinese startup DeepSeek has demonstrated its ability to achieve substantial results with significantly lower capital expenditure at less than one-tenth of that in ChatGPT, thus challenging the perceived barriers to entry and US dominance. More entrants will emerge, leading to increased competition, greater innovation and faster AI development.
DeepSeek’s advancements will commoditise AI. Adoption rates among households and businesses will increase with cost efficiencies.
Enterprise software and hardware providers, including semiconductors, with lofty valuations, are now seeing some pullback as investors digest the changing landscape. Technology firms are shifting focus to optimise capex and efficiency, which may slow demand for advanced chips, particularly the most sophisticated models.
Conversely, consumer software and hardware companies will be direct beneficiaries of faster AI adoption. For software, more AI-enabled applications will be developed at a faster clip, hence lifting demand for software subscriptions. This will also catalyse stronger replacement demand for AI-enabled hardware, such as mobile phones and personal computers.
While maintaining our exposure to the AI theme, we are pivoting from enterprise-focused to consumer-orientated firms to take advantage of the higher growth potential.
Evonne Tan: It is a big deal, but it should not come as a surprise. In any technological revolution, accessibility – and therefore affordability – is key. It was just a matter of time before a cheaper and more efficient version of ChatGPT was introduced. The investment case for AI is still there, but the changing dynamics mean that investors should focus on the use cases rather than the infrastructure build-up.
DeepSeek’s low-cost, high-performance AI models challenge the traditional dominance of US firms such as OpenAI and Google. If DeepSeek’s model proves highly effective at lower cost, it could lead to a downward adjustment in AI valuations, particularly for firms with high capital expenditures on computing power used to train AI models.
However, by making advanced AI models more accessible, it could accelerate AI adoption globally, benefiting companies that enable AI deployment – such as cloud providers, AI software enablers, chipmakers – rather than just those developing frontier models. Additionally, DeepSeek is challenging US’ AI leadership, suggesting that investors should not solely focus on the US, but also look towards China for potential opportunities relating to AI.
BT: What macro factor/s could hold the biggest positive or negative surprises in 2025?
Jason Moo: We’ve identified five key themes, or “supertrends”, that will underpin the way we construct portfolios and evaluate investments. They are the changing world order, activating asset allocation, finding artificial intelligence (AI) in real life, powering ahead, and living 2.0. These are themes related to geopolitics, macroeconomic policy, investment, technology and the environmental and social dilemmas of our time.
While geopolitics is the most prominent theme in the minds of investors, other themes such as demographic shifts and ageing populations could have significant influence on world economies.
As working-age populations shrink, competition for skilled talent will intensify, spurring investment in automation and productivity-enhancing technologies. While the world will see a greater need for static robots, more exciting growth will come from the combination of AI and robotics, for we are now entering a new era in which AI-robots and humanoids will be moving all around us.
In addition, declining populations have the potential to drive the need for reskilling in the face of labour shortages, along with the rise of automation. This requires the technical expertise for jobs to evolve. Indeed, training, reskilling and retaining talent is key to human capital strategy, and companies are noting the growing skills gap across industries which are hindering growth and advancement in their sectors.
Therefore, companies exposed to education, reskilling, retention and recruitment are likely to see greater demand for their services. Staffing and recruiting companies may benefit from helping firms navigate human capital gaps, while also helping to provide reskilling services.
Young Jin Yee: Real wage growth remains positive for consumers and encourages a stronger pace of growth. Unemployment remains low and changing immigration policies are limited in scope, helping to avoid labour market bottlenecks which might limit production. US tariffs are used primarily as bargaining tools and tend to be of short duration, with limited disruption. Investment spending continues to grow with a focus on technology.
In Asia, growth conditions remain generally resilient; regional inflation is low; policy is still being eased; US dollar strength should moderate in the second half, and several Asian markets boast some of the strongest links to AI outside the US.
While top-down macro conditions may improve meaningfully, China’s rapid technological breakthroughs have stolen the spotlight. We think the emergence of DeepSeek and other world-class cost-efficient models marks a “Sputnik moment” for AI that suggests domestic innovation can overcome its hardware and investment restrictions.
The rest of Hangzhou’s “Six Little Dragons” (Game Science, Unitree Robotics, Deep Robotics, BrainCo and Manycore Tech), aggressive AI capex plans from the Internet giants, and a strong show of support for private-sector champions also point to longer-term momentum for the sector. But as the rally matures, investors should look for relative value across AI opportunities.
Joseph Poon: We see several key possibilities this year. Positive surprises include tax cuts, which will add to the bottom line of the broad base of US companies and support the earnings picture. Another positive surprise will be a resolution to the Russia-Ukraine war, which could be a positive surprise in terms of abating geopolitical risk. Should this happen, European equities stand to gain.
On the other hand, a negative surprise scenario would be an escalation of tit-for-tat tariffs, which would hurt growth while introducing a potential inflationary shock. The uncertainty could hit sentiment.
Kelly Chia: A positive surprise this year could be aggressive policy action by the Chinese government to stimulate the economy. Based on previous track records, stimulus have been steady to achieve targets, but typically will not “over-deliver”. A policy that matches the pace of China’s “Covid reopening U-turn” would likely take the market by surprise.
A big negative surprise could be a faster-than-expected deceleration in the US economy. This would spill over to many assets that have performed well, ranging from equities to rising defaults in some parts of the booming private asset world. At the very edge of negative surprises (low probability but high impact) would probably be another “Covid-like” health emergency or a natural disaster in a built-up financial centre.
Foo Tian Ong: The biggest positive surprise this year is likely to come from fiscal policy easing, primarily in Europe, with moderate boosts from the US and China.
The US administration’s pressure on Ukraine to end its long-running conflict with Russia has catalysed the European Union to re-look at their defence spending. Increased defence and infrastructure spending have the potential to heighten the region’s structural growth outlook.
China’s National People’s Congress has also announced a fiscal spending plan which is expected to provide stimulus equivalent to 1 to 2 per cent of GDP. Escalation of the ongoing US trade war may lead to further stimulus. Meanwhile, the Trump administration’s plans to implement a tax cut package may moderately increase the fiscal deficit, providing a growth impulse. The main challenge against a larger stimulus is likely to come from bond investors wary of the US’s soaring debt now running at almost 124 per cent of GDP.
The biggest macro risk is stagflation, where high inflation occurs alongside declining economic growth and elevated unemployment. Surveys show US consumers and investors are anticipating higher inflation in the coming years. With the post-pandemic inflation spike still lingering in the public mood, any sign of a revival of inflation is likely to delay Fed rate cuts, further dampening the growth outlook.
Evonne Tan: Geopolitics, in the largest possible sense, will continue to be a key factor to watch in 2025. Whether it is tariffs, war in Ukraine, relations between the US, China and the rest of the world, all these will have significant ramifications including on fiscal and monetary policies. Immigration will be another key topic as globally there seems to be tensions around this theme, and this could lead to populists gaining traction.
In the US, the risk is that measures to curb immigration could lead to labour shortages and price pressures in sectors that are dependent on migrant labour, leading to inflationary pressures.
BT: How important are portfolio hedges this year, and what sorts of hedges are you recommending?
Jason Moo: Asset allocation and diversification will be key considerations for investors in constructing portfolios to face the uncertainties ahead. We believe in multi-asset portfolios with adequate exposure across equities, fixed income and alternatives. In fixed income, active management of duration and credit risks is key.
Equity portfolios will benefit from diversification across regions, sectors and exposure to quality companies with strong business models. Gold acts as an effective hedge against inflationary risks, geopolitical uncertainties and longer-term concerns of fiscal sustainability.
Alternatives, including hedge funds and private markets, offer diversification in portfolios. In addition, investors could consider diversified currency exposures, access to different styles of portfolio managers and appropriate use of derivatives in keeping with individual risk profiles.
Young Jin Yee: Volatility is likely to be elevated in the months ahead as markets consider a wider range of potential US policy outcomes.
In equities, we identify a variety of investment ideas that can weather some global risks. These include stocks in Europe that could benefit from the German election result; increased security investment; the rebuilding of Ukraine; and importantly, exposure to assets with limited trade risks.
Investors also should manage allocations to long-duration bonds carefully, given US policy uncertainty. We also advise investors to stay with high quality bonds amid the risk of higher credit spreads.
We think long USD/CNY could be a hedge against escalating trade risks, while oil prices could move higher if US sanctions against Iran are stepped up. Lastly, we continue to see gold as a good diversifier against geopolitical and growth concerns.
Joseph Poon: Investment-grade bonds are a strong hedge – offering 5 to 6 per cent yields. They guard against growth slowdowns and weak sentiment, as lower rates tend to result in an uplift in high-quality bond prices. We saw this play out in 2019 during the previous escalation of trade tensions, where bond returns remained decent despite the weaker turn in sentiment.
We have long been advocating for gold as a portfolio risk diversifier within the DBS CIO barbell strategy. This is due to gold’s characteristic of being non-market directional, which 2025 continues to prove. In addition to its risk diversification properties, we also see multiple tailwinds for this asset moving forward. In the short term, heightened policy uncertainty under Trump 2.0 should increase safe haven demand for gold.
The potential revaluation of US gold reserves is another positive factor. In the medium to long term, de-dollarisation and monetary debasement tailwinds remain in play due to the mercurial nature of geopolitics, as well as projected increases in the US fiscal deficit.
Kelly Chia: Hedges are critical in 2025 amid tariff uncertainty, AI disruption and macro volatility. They protect against downside risks while preserving upside potential. Gold stands out as a safe haven, countering inflation and currency swings from trade wars. US Treasuries offer a buffer if growth falters, though yields may rise with fiscal risks. Options strategies, such as puts on overvalued tech, guard against AI-driven sell-offs.
Dividend-yield stocks provide defensive equity plays, hedging inflation surprises with stable cash flows. However, hedging among some types of investors (typically high-net-worth clients) remains curiously absent. We all have insurance on our lives, property, cars, dogs and even violins, but paying for protection for a multimillion-dollar portfolio seems a difficult decision for some. But don’t get us wrong, we avoid over-hedging as we remain growth focused.
Foo Tian Ong: There are two key market risks: initial higher inflation due to higher tariffs and the potential for slower economic growth coupled with recession risks.
To hedge against inflation risks, investors can increase their allocation to gold, which historically performs well during periods of stagflation. Additionally, alternative investments, with its low market correlation, provide protection during inflationary periods.
Long-term bonds, particularly government bonds, are likely to benefit from declining yields in a low-growth environment. They tend to perform well during recessions, hence making them an effective hedge.
Evonne Tan: Hedging is certainly part of the toolkit that investors should rely on, especially in periods of heightened market uncertainty and volatility. There are two main types of hedges that can be deployed – structural and tactical.
Structurally, we believe investors should retain a long-term exposure to gold as a portfolio diversifier, and a hedge against both geopolitical and inflation risks. Historically, gold has a persistently low correlation to traditional financial assets which can potentially help lower portfolio volatility and therefore, all else being equal, it increases diversification and enhances the overall risk-adjusted return of a portfolio.
Tactically, the use of options can act as a hedge and help reduce downside risk in periods of volatility. But the key is to properly manage the costs and time decay associated with such a hedging strategy, as they can quickly eat up returns if not done properly.
