1. China stimulus: Equity markets in 2025 are likely to be dealing with the after-effects of last year’s election outcomes and subsequent political shifts. Of note for emerging markets in the year ahead are the risks of higher US tariffs and policy-driven volatility as the second Trump administration enters office. China is attempting to minimize the risks inherent within geopolitical tensions by keeping up with its policy support. In 2025, we may see signs of macro stabilisation from these policies, possibly allowing scope for a cyclical recovery. Our China portfolio manager, however, feels that there may be some potential disappointment until the release of key details of upcoming policies, which will likely happen in March 2025. However, he notes that stimulus has shifted from targeting supply to boosting demand.

2. Indian market: The Indian economy and stock market are less coupled with the United States relative to other EMs. Due to concerns of an economic slowdown and high valuations, we do not rule out the possibility that India’s equity market will correct. However, our engagement with corporations in India makes us optimistic, as companies are reporting slightly better business starting from October 2024, with most companies emphasising that there is no further slide in growth. We see some stabilisation here. We also note the Franklin Templeton semi-annual survey of our fund managers globally singled out India as a market they favour in 2025.

3. Ukraine: President Trump has spoken of swiftly resolving the Russia-Ukraine war after his inauguration. Investors will focus on the likelihood of a peace deal incorporating an easing of US and European sanctions on Russia, among other concessions. A resumption of transit gas shipments via Ukraine to Central and Eastern European countries is also a focus area, given that Ukraine cut these flows on 1 January. Gas storage in Europe was elevated entering the Northern Hemisphere Winter, which reduces the risk of an energy price spike in the short term. Nevertheless, significantly higher energy prices in Europe relative to the United States remain a competitive disadvantage for the region.

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