From an Asian perspective there is no question that the opening months of 2025 have delivered a regime change. It is a term that is oft-used and oft-devalued, but I believe firmly we will look back on this period and say that the events of the first half of 2025 were a turning point. Trends that have begun over the past two months may well prove definitive for the next decade.
Some hard truths are emerging: the big money investors we deal with in Asia are unlikely to be allocating 70 per cent of their money to the US equity market for too much longer; allocations to US Treasuries similarly deserve close examination; and we should think carefully about where else that money might go.
Hedging is a big question for the Asian investors we talk to every day and de-dollarisation is being actively discussed. The orthodoxy of the 60-40 portfolio has long been undergoing a rethink, as has how we all deal with currency exposure.
The United States will not be entirely left behind. It is still the world’s biggest market and one that demands allocation. But markets are never a business of black and white, big moves happen because of a shift at the margins.
All of that has profound implications for our clients. Our job is to deliver the thought and action that allow them to see through the immediate uncertainty and define where markets are headed in the longer term and what it means for the construction of portfolios.
That is no small job, and our mid-year outlook includes a preview of our new Investor Toolkit - a guide from our asset class experts on how to deal with the different scenarios ahead.
We will need all the tools we can lay our hands on for the months to come, because the first half of 2025 has made one thing clear: high tariffs or not, it will not be business as usual at all.
