Investing Pantheon: December 2024
Amidst holiday cheer and season’s greetings, markets in red have not been the most appetizing. Having recapped the year 2024 in November, this edition looks at key themes that will be vital as we step into 2025. It is likely to be a different regime from the pre-covid world, with slowdown in growth, possible corrections in equity valuations and new trade and tariff policy formulation. This is the time to position portfolios for what lies ahead, ignoring the recency bias. It’s a new year, a new economic cycle and new investing opportunities will emerge.
US is getting to bubble?
There has been a high buoyancy in the US markets but it is still backed by strong economic growth and earnings.
US services has done well, manufacturing not really
There is a clear divergence between services and manufacturing output in US, which also reflected in equity performance, with Tech outperforming other sectors.
Precious metals will hedge against 2025 risks
Be it higher US debt or resurgence of inflationary pressures, precious metals will offer the right hedge.
China’s fiscal stimulus is delayed, not cancelled
The growth in China is showing some green shoots but the fall in bond yields show the investors are not yet convinced. Most likely, China will retaliate to Trump policies with fiscal stimulus and therefore a tactical hold call stays.
India is still a sweet spot in growth, equity valuations may mean revert
India has its own growth areas on the economic front, but equity valuations correction have been long warranted.
There will be new opportunities that will emerge in 2025, as the froth in markets correct. It may also be an interesting year for asset allocators. Watch out for Trump policy formation and the market volatility in the early days of 2025. Domestically, the MPC of February will be an important one to watch out for. Happy Investing and Happy New Year to all our viewers.