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Investment Monthly

Pricing a perfect picture?
05 September 2025
    Download the full reportPDF, 6.6MB

    Key Takeaways

    • A regime of G-zero economics is emerging, where no one economic power is leading the global order and is characterised by supply shocks, constrained growth, and high and volatile inflation
    • As US exceptionalism fades, and with global profits growth broadening out, we maintain a relative preference for markets outside the US
    • The US dollar remains over-valued and is expected to face continuing weakness, which should be a catalyst for emerging market assets
    • Portfolio resilience can be built with “safety substitutes” including selective high-quality fixed income, multi-factor strategies, and real assets like gold

    Macro Outlook

    • Policy uncertainty remains high, with tensions between the US administration and the Federal Reserve the latest example
    • The economic outlook is clouded by uncertainty about the impact of tariffs amid signs of cooling growth – yet market volatility has fallen sharply over the summer, with many markets pricing stronger growth
    • We think premium growth opportunities lie in emerging markets, with economic power shifting to Asia and the Global South
    • In Asia, trade reforms, stronger regional co-operation, and export diversification, should boost resilience amid tariffs and external headwinds

    Policy Outlook

    • US Federal Reserve Chair Powell raised the prospect of a September rate cut amid a “shifting balance of risks”, with near-term inflation risks tilted to the upside and employment risks tilted to the downside
    • Eurozone inflation is at target but could ease on slower wage growth, tariff shocks, and euro strength – potentially allowing further ECB easing
    • Growth concerns, benign inflation, and USD softness in 2025 aid the case for more monetary easing and fiscal support in EM Asia
    • Supportive macro policy in China is focused on structural rebalancing – mainly via supply-side reforms to restore corporate profits and boosting consumption on the demand side – as well as longer-term strategies