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Review and Outlook
The investment year 2025 has impressively confirmed how resilient the economy and the financial markets can be, even in a challenging environment. Trade tensions in the wake of Trump’s agenda caused uncertainty at times, but without leaving any lasting marks. At the same time, market activity was characterised by a significantly weaker US dollar, a surprisingly strong Swiss franc and the rapid return to a near zero interest rate environment in Switzerland. Despite these challenges, the equity markets performed very well, driven in particular by technology stocks. Gold was one of the best performers of the year, confirming its role as an important source of stability and diversification in portfolios.
The outlook is characterised by a cautious but clearly constructive mood. We expect interest rates to ease globally, which will improve financing conditions and support both capital expenditure and the pricing of riskier assets. It remains to be seen whether and how consistently the new Fed chair will pursue the cycle of interest rate cuts. At the same time, investors are demanding higher risk premiums at the long end, which argues for a steeper yield curve. In this environment, gold remains well supported, particularly as a hedge against geopolitical and fiscal uncertainties.
“Success in financial markets is rarely the result of certainty, but rather of conviction and discipline.”
Despite higher valuations, the overall environment for equities remains favourable, even though demand for earnings growth and stock selection has risen significantly. Expectations for large technology companies are high, but there is a good chance that they will be met. The recurring discussion about a possible bubble (especially in AI stocks) seems to have been put on hold for the time being, as long as earnings growth and investments support valuations.
In addition, there are signs of a gradual improvement in relations between China and the US, which is increasing visibility for global supply chains and investments.
Swiss equities benefit from their defensive sector mix, solid balance sheets and high international earnings diversification. They therefore remain a stabilising component of broadly diversified portfolios. Emerging markets also appear attractive in this environment: lower interest rates, a weaker US dollar and rising demand point to a constructive environment, even if the differences between individual countries and regions remain significant. The Swiss franc is likely to remain strong, particularly against the US dollar, and continue to play a central role in the portfolio context.
Last but not least, there are justified hopes for an end to the war between Russia and Ukraine. Such a scenario could pave the way for extensive investment programmes in Europe and trigger a new spirit of optimism. Especially in this tense environment of uncertainty and opportunity, it remains crucial to structure portfolios carefully, remain flexible and actively exploit opportunities.
Giorgio Saraco,
Partner, Head Asset Management
