UK Banking Group Favors US, Chinese, Indian Equities, Gold In 2025

Details of Standard Chartered’s chief investment office Outlook 2025 report show how investors should position themselves in 2025. The CIO’s views are based on the outcome of the recent US Presidential election and the impact on US domestic economy and on the wider global economy.

UK-headquartered banking group Standard
Chartered says it is overweight in US equities and gold,
preferring equities over bonds, and underweight in cash in
foundation portfolios at the start of 2025.

The bank is overweight in US equities, as the likelihood of
expansionary policies following recent elections, such as
potential tax cuts and deregulation, add fresh impetus for US
companies, on top of accelerating earnings growth. It sees
investment opportunities in US small-caps and US regional banks
while closing US healthcare as the sector has been weak. It also
expects momentum in the US growth sectors of technology and
communication to continue, and financials to benefit from
deregulation and a soft landing.

Other wealth managers, such as Northern Trust Asset Management,
UBS Global Wealth Management, Pictet Asset Management and Goldman
Sachs Asset Management also favour US equities in 2025. See more
commentary
here.

Standard Chartered is underweight in the euro area, with
supportive US policy likely to maintain US outperformance.
Political uncertainty in France and Germany is also likely to
weigh on investor sentiment, adding to tariff concerns in the
region. It is downgrading discretionary to underweight as
autos face competitive and tariff headwinds, while demand for
luxury goods is soft.

The chief investment office (CIO) sees UK equities as a core
holding (neutral) with an attractive dividend yield and valuation
discount. UK equities offer a defensive sector composition, but
the lack of growth sectors could limit outperformance.

Asia

Japan equities are a core holding (neutral) for Standard
Chartered. It is encouraged by improving share buybacks and the
reflationary environment, although they remain vulnerable to
swings in the yen carry trade.

Asia ex-Japan equities are also a core holding (neutral). In
Asia, the firm is overweight in Indian equities. India’s return
on equity remains strong. Robust domestic inflows and relative
insulation from overseas trade tensions lend further tailwinds.
The CIO favors large-cap equities rather
than small/mid-caps, given their less stretched valuations .

Taiwan equities are a core holding. The lender is
underweight in Korea due to its high vulnerability to US import
tariffs and escalating political tensions, which add to rising
global trade uncertainties. Standard Chartered views China
equities as a core holding. Facing deflationary pressures, China
is likely to try and offset US import curbs with higher exports
to non-US markets and increased stimulus to boost domestic
demand. The firm prefers onshore equities versus their offshore
counterparts, as they are likely to be a more direct beneficiary
of any positive policy surprises. However, lingering US-China
tensions, alongside structural concerns, such as a property
sector downturn and deflationary worries are likely to
continue to weigh on share price momentum.

In China, the CIO prefers technology, communication and
discretionary, which are tied to improving consumption. It is
downgrading healthcare to neutral amid intense competition
and inventory destocking headwinds. The firm has also upgraded
ASEAN to neutral due to increasing foreign direct investments and
the likelihood of a positive spillover from China’s policy
stimulus.

Within bonds, Standard Chartered is overweight in developed
market high yield bonds as the higher yield drives total returns.
In Asia, it prefers high yield over investment grade bonds given
their domestic exposure and probable support from China’s
stimulus measures. Emerging market local currency bonds are most
at risk from Trump’s tariff proposals, keeping the firm
underweight. The firm is also switching from cash to dollar-based
bonds to lock in attractive yields over the longer term.

The CIO sees tactical opportunities in selective US, China and
India equity sectors. Bond opportunistic ideas continue to look
for pockets of value amid elevated valuations. It also holds an
overweight view on gold relative to other major asset classes.
Continued robust demand from central banks remains a key driver
in its view. While this may have slowed to some degree in late
2024 because of a sharp rise in gold prices, this indicates that
central banks are not entirely price-insensitive; the firm
expects demand to rebound on pullbacks in the gold
price.      

“While it is important to keep abreast with global events and
their impact on markets, it is even more important to focus on an
investment plan,” Manpreet Gill, chief investment officer of
Africa, Middle East and Europe, for Standard Charter’s wealth and
retail banking business, said. “Be disciplined, stay invested and
don’t try to time the market too much. Ensuring a good
diversification in your portfolio, maintaining a foundation
portfolio and regularly adding to it when opportunities arise,
would help achieve your long-term financial and life
goals.”