Our company today released an annual market outlook report titled "In Search of a New Equilibrium: Global Market Outlook for 2025." This report analyzes the major themes of the world economy and financial markets and presents our views on investment strategies for 2025.

Major macroeconomic outlook for 2025:

1. A gradual acceleration of global growth: After the economic slowdown in 2024, we expect the world economy to return to a gentle recovery path in 2025. According to our forecast, the world GDP growth rate is expected to reach 3.5% to 3.8%. In particular, emerging market countries such as India, Indonesia, and Mexico are likely to drive the growth.
2. A gradual normalization of inflation: Due to the stabilization of energy prices and the easing of supply constraints, we expect the inflation rates in major advanced countries to converge around the central bank target of 2%. However, due to structural tightness in the labor market and geopolitical risks, the downside risks of inflation are limited.
3. A cycle of fine-tuning of monetary policy: The Federal Reserve (FRB) and the European Central Bank (ECB) will continue a mild interest rate cut cycle, and we expect them to further lower the policy interest rate by 75 to 100 basis points by the end of the year. On the other hand, the Bank of Japan is in the process of normalization, and further gradual tightening is expected.
4. The continuation of geopolitical fragmentation: The trend of fragmentation in the world economy will continue, and the formation of regional trade blocs is expected to progress. This will bring long-term structural changes to specific supply chains and sectors.

Market outlook and investment strategies:

1. Stock market: Despite concerns about valuation, global stocks are expected to provide moderate returns due to the recovery of corporate earnings and the improvement of the liquidity environment. By region, there are attractive opportunities in specific sectors in Japan, emerging Asia, and Europe. Caution is needed regarding excessive concentration in large-cap technology stocks.
2. Bond market: In an environment where long-term interest rates stabilize and the yield curve normalizes, bonds are expected to provide attractive returns and portfolio diversification effects. Selective inclusion of high-grade corporate bonds, emerging market bonds, and floating-rate products are promising areas.
3. Currency market: The US dollar is expected to show a gentle downward trend, and a gentle appreciation of the euro and the yen is expected. Among emerging market currencies, there are selective investment opportunities in the currencies of countries with strong fundamentals.
4. Alternative investments: Private credit, infrastructure, and certain real assets will likely be attractive investment destinations that provide inflation hedges and diversification effects.

Kenichiro Yasuda, Head of the Research Department, commented, "2025 will be a year in which the transition from the extreme market environment of the past few years to a more normal state progresses. However, this 'new normal' will be different from the past and will reflect structural changes such as the impact of geopolitical risks, technological innovation, and climate change. In such an environment, dynamic asset allocation and thorough stock selection will be the keys to investment success."

The full version of the market outlook report is available to registered users on our company's website and existing customers.