Following up on our previous piece, we would like to expand our analysis to focus on selected markets. Our insights are as follows:
- U.S. – We anticipate moderate growth for U.S. equities in 2025, assuming no unforeseen black-swan events. This growth is expected to be driven by tax cuts, deregulation, and improved earnings visibility (Figure 1), though we do not expect the same level of gains seen in 2023-2024. Potential tax cuts, such as reducing the corporate tax rate to 15%, could lower corporate tax burdens, potentially saving $600 billion over 10 years. Deregulation could generate $70 billion in economic benefits, particularly for sectors like financials, real estate, and energy, with increased M&A activity likely under a Trump administration.
Figure 1: S&P 500 projected to see higher sales and margins in 2025
Source: Bloomberg, 11 December 2024
- China – The market has been challenging with the property headwinds and weak economic data in the region. However, the government has eased mortgage policies and the central bank has reduced lending rates to bolster economic recovery. In addition, securities regulator has halved stamp duty to revive investor interest in equity market. We believe China has more policy tools in reserve to cope with a challenging year ahead and will continue to roll out stimulus measures in a timely manner to stabilise and boost the market sentiment. The poor market sentiment has driven down China stock prices and many of China stocks are trading at very attractive valuations. While China may face challenges from increased tariffs, the overall impact on the market will depend on how swiftly regulators adapt their policies to ensure economic stability.
- Asia Pacific – The IMF forecasts that Emerging and Developing Asia will grow by 5.3% in 2024 and 5.0% in 2025, driven primarily by China, with growth projected at 4.8% in 2024 and 4.5% in 2025, and India, expected to grow at 7.0% in 2024 and 6.5% in 2025. Growth in India, Korea, and Taiwan is expected to slow due to softer capital expenditures and normalizing exports, but the region remains cautiously optimistic with opportunities for trade reshuffling and higher yields. Also, WSTS forecasts 11.2% semiconductor growth in 2025 after 19% in 2024, following an 8.2% decline in 2023. While AI demand remains strong, consumer electronics weakens. Given slower chip exports and lackluster non-tech exports, Asia’s export growth will likely transition to a slower pace in 2025. Nevertheless, the high dividend yields in the Asia Pacific and ASEAN regions, at 3.01% and 4.48% respectively, make them a safe haven, outperforming the MSCI World, which stands at only 2.01%.
Figure 2: Dividend Yields Across Selected Markets
Source: Bloomberg, 31 December 2024
- Malaysia – We maintain a cautiously optimistic view on Malaysia, supported by strong economic growth, with GDP expected to grow 4.0%-5.0% in 2025. The economy benefits from solid private and public investments, a stable political environment under PMX Anwar, and a stronger MYR attracting foreign funds. Rising FDI and DDI, driven by US-China trade tensions and sectors like semiconductors, AI, and renewable energy, add further momentum. Additionally, catalysts such as the JB-SG Special Economic Zone and prospective projects like the High-Speed Rail enhance prospects. Despite potential volatility with Trump’s 2025 presidency, we remain focused on strategic, selective stock and sector investments.
Phillip Capital Malaysia and our offerings
We reaffirm our belief that there are still opportunities in the market, and we maintain a discerning approach in choosing high-quality stocks for our portfolio. However, it is crucial to exercise caution and carefully select investment options to ensure the best risk-adjusted returns. By taking a vigilant and discerning approach, investors can potentially reap the benefits of the current market opportunities while minimising risks.
A noteworthy avenue for investors seeking diversification in their portfolio is through PhillipCapital Malaysia. PhillipCapital Malaysia offers multiple private mandate services managed by professional fund managers. By leveraging PhillipCapital Malaysia’s private mandate services, investors can enhance their resiliency, optimise portfolio performance, and navigate the complexities of the market with confidence.
We also offer both conventional and Shariah-compliant options to cater to the needs of all investors. For Malaysia’s mandates, we like:
- PMART/PMA Dividend Enhanced and/or PMART/PMA Dividend Enhanced ESG
Our PMART Dividend Enhanced and PMA Dividend Enhanced is an income-driven portfolio focused on high dividend-yielding equities. We apply the Dog of the Dow approach, screen and select top market cap stocks to minimise risk and ensure consistent performance. The portfolio is an equal weighting portfolio which reduces concentration risk and provides similar exposure to all clients, both initially and after rebalancing. We offer both conventional and Shariah investment options to cater to the diverse needs of our investors. Click here to learn more. We recently also introduced PMART/PMA Dividend Enhanced ESG Mandate as we remain dedicated to investing in ESG stocks given their stronger valuation and profitability.
- PMART/PMA ESG
Phillip Capital Malaysia offers discretionary portfolio that invests in stocks with high ESG ratings from the F4GBM and F4GBMS Indices, namely PMART and PMA ESG. There are both conventional and Shariah options available. To explore the companies in which both Conventional and Shariah ESG mandates invest, you can refer to the provided link.
- PMART/PMA Blue Chip and Opportunity
Our Blue-Chip portfolios primarily allocate our investments towards companies with large market capitalisations, while the Opportunity portfolios predominantly invest in companies with smaller market capitalisations. We also offer both conventional and Shariah-compliant options to cater to the needs of all investors.
Please click on the link to learn more or email us at cse.my@phillipcapital.com.my if you require any further information.
Disclaimer:
The information contained herein does not constitute an offer, invitation or solicitation to invest in Phillip Capital Management Sdn Bhd (“PCM”). This article has been reviewed and endorsed by the Executive Director (ED) of PCM. This article has not been reviewed by The Securities Commission Malaysia (SC). No part of this document may be circulated or reproduced without prior permission of PCM. This is not a collective investment scheme / unit trust fund. Any investment product or service offered by PCM is not obligations of, deposits in or guaranteed by PCM. Past performance is not necessarily indicative of future returns. Investments are subject to investment risks, including the possible loss of the principal amount invested. Investors should note that the value of the investment may rise as well as decline. If investors are in any doubt about any feature or nature of the investment, they should consult PCM to obtain further information including on the fees and charges involved before investing or seek other professional advice for their specific investment needs or financial situations. Whilst we have taken all reasonable care to ensure that the information contained in this publication is accurate, it does not guarantee the accuracy or completeness of this publication. Any information, opinion and views contained herein are subject to change without notice. We have not given any consideration to and have not made any investigation on your investment objectives, financial situation or your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any persons acting on such information and advice.