Thoughts on 2025

I can't predict the future. My predictions are often wrong.

I feel that 2025 will be a year of uncertainty

On US

Many strategist felt that in 2025, US equity markets will provide positive returns but less than 2024, despite its current high valuation. 

Some people felt that US will have a correction in 2025, because

- Money rotate from expensive US to cheaper non-US markets

- US may have high inflation from Trump's tarriffs

US economic growth has been stronger than expected in 2024. China economist, Li Daokui, felt that US economy is over-heating, as its unemployment rate is 3-4% now and its medium unemployment rate in the past is 7%. Some US economists noted that the strong US economic growth is due to its govt 6-7% budget deficit spending. 

I feel that US economic growth may slow in 2025, given the slower economic growth in other parts of the world, the likelihood of lower US govt spending (US govt need to cut down its budget deficit), fewer Fed cuts. 

On China

Personally, I felt that China govt has pivoted its policy and will push out more fiscal stimulus in 2025. The question is that will the fiscal stimulus be enough? 

On HK/China markets, given the current valuation, the downside may be small while the upside could be fairly large if the fiscal stimulus met market expectations. So it is a case of 'heads, I lose small, tails I win big'. 

However, given that China has been reluntant to roll out large fiscal stimulus, the chances of 'its fiscal stimulus meeting market expectations' is small. 

On Singapore

Singapore banks will benefit from fewer Fed rate cuts in 2025. However, I do not have any position in SG banks, besides my SRS position in STI ETF. And, I am not keen to buy SG banks at current prices. 

I also wonder what's Singapore interest rate will be like, given that most countries may cut rates in 2025 to counter lower economic growth. 

Singapore economic growth is likely to be slower, compared to 2025, esp if Trump imposed flat tariffs on imports from all countries which will have negative effect on Singapore (which is an export-oriented economy).