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By  Samuel Ruiz

U.S. Economic Slowdown and Global Market Shifts

March 2025

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      Following two great years for global equity markets, we've now faced with more volatility in 2025 and for reasons that people didn't expect.

      With the Trump win, many expected that the policy would actually be directly beneficial for the US economy and also US corporate earnings.

      However, with now what's been coined as US growth scare, we're realising that there's a higher appetite to slow the US economy, namely via less government spending.

      This government spending directly feeds into US GDP, and with the US government trying to cut around US$1 trillion of spending, there's now a fear around what this means for a slowdown in that economy, but also which companies would have directly benefited from that spending.

      On top of that, we've seen much more random execution of tariffs, and this is creating not just volatility in the US, but also it's actually inspiring other countries such as Canada, such as Germany, and throughout Europe, where they may need to actually focus more on their own defence spending and securitising their own energy supply.

      We're actually seeing countries like Germany significantly upgrading their plans for their fiscal deficit.

      And this is going to see a shift in economic growth, which has been really concentrated in the US and bring more growth to other parts of the world.

      So it's no surprise that in 2025, as a result of this, the US market has actually been a laggard and we've seen economies unexpected such as Germany, even China dramatically outperforming the US market to as high as 25% in such a short amount of time.

      In terms of how we reflect on this, there is a lot of concern in the market, but we still have a half glass full view.

      We think that the economy in the US particularly can withstand the slowing down.

      We don't see a large widespread risk of credit default or a big credit issue in the US and we think that this slow down is by design and will largely be swift and not too devastating.

      In contrast though, we're really optimistic about the broadening of opportunities beyond the US because it was very concentrated in that one country for a long period of time.

      So some of the decisions we've been making more recently is to actually lean in favour of some markets that haven't been so great in emerging markets such as Indonesia, such as Philippines as well.

      And then even more recently, we've actually been reducing a little bit of our US exposure in favour of Europe.

      And we think some of the increased government spending in Europe directly feeds through to higher economic growth and there are exposures there in areas such as infrastructure that we expect to be beneficiaries of this.

          

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