Chong Jiun Yeh

Chief Investment Officer (CIO)

What surprised you most about 2024?

Throughout 2024, we tracked the many elections that took place – this was in fact the biggest display of democracy in modern history. However, we also kept a close eye on the more violent global events. This includes Iran becoming drawn into the Israel-Hamas war, and North Korea’s military support for Russia.

Sadly, 2024 marks a year when power transitioned peacefully for many parts of the world, but also when wars escalated disastrously, and spilled over into neighbouring countries. While their impact on global markets have been relatively muted so far, 2024 teaches us that geo-political tensions can ramp up quickly, and portfolios must always be cushioned against event crises.

What will surprise investors in 2025?

For Asian investors, it is important to remember that no region is immune to sudden and surprising market events. The declaration of martial law by South Korea’s president is a good case in point - although the declaration was quickly retracted, the chaos continues.

In 2025, existing tensions in the South China Sea or between North and South Korea are similarly vulnerable to escalation stemming from out-of-the-blue events. On the other hand, if US-China tensions do not deteriorate under Trump 2.0, then smaller cap stocks could start to rally, and AI/ tech stocks could surprise the markets by underperforming the broader equity market.

As investment managers, we carefully construct base case scenarios that we believe have the highest probability of coming true. But this does not mean that we disregard all other scenarios, and a portion of our portfolios are designed to withstand the unexpected. For us, unforeseen surprises are the rule, not the exception.

Dharmo Soejanto

Chief Investment Strategist, UOBAM Invest

What surprised you most about 2024?

Within theme-based investing, the gold rally was one of this year’s biggest surprises. Gold prices have risen by almost 30 percent, beating global equity returns, despite the headwinds of higher interest rate and a strong US Dollar. Typically, high interest rates tend to reduce the demand for gold as gold does not generate any income. And seen as an alternate “currency”, gold prices tend to fall when the US Dollar is strong.

But it appears that other factors in 2024 took precedence. First was the geo-political tension in Middle East, which drove investors to gold as a safe haven. Secondly, Chinese investors turned to gold amid falling property prices and a weak stock market. Thirdly, worried about adverse foreign policies under a second Trump term, central banks accumulated gold as a way to diversify their foreign reserve holdings. The lesson for investors is to never underestimate gold’s multifaceted appeal.

What will surprise investors in 2025?

I expect to see the rise of nuclear power, driven by the exponential growth in energy demand from AI applications, as a potential under-the-radar theme for 2025. Analysts estimate that in the US alone, increasing AI usage will require the equivalent of 400 additional power plants every year from now to 2030 in order meet demand. This is unlikely to be met using traditional energy sources, especially given the need to decarbonize the global economy.

Nuclear power is seen to be part of the solution. Google and Meta have both announced plans to use nuclear to power their data centres, and the general public seem more convinced of the safety improvements implemented by the nuclear industry. Based on International Atomic Energy estimates, nuclear power investments will need to grow from the current US$50 billion to US$125-150 billion annually. This would create various investment opportunities along the whole nuclear supply chain, including for uranium miners and nuclear reactor builders, that could gain traction next year.

Joyce Tan

Head of Asia Fixed Income

What surprised you most about 2024?

While I had expected credit spreads to tighten this year, the pace was swift and sharp. As of end-October, investment grade credit spreads have narrowed by 42bps to 106bps – not seen since 2007. Meanwhile, high yield spreads have also declined, but not by as much. My team and I decided to secure positions as early as possible in order to lock in total returns for our investors, just when yields were beginning to look less attractive than before.

Markets also turned more positive on China property bonds in 2024 than I would have expected. This was in the wake of the government’s fiscal easing and policies to support specific sectors, including real estate. However, in my view, these policies are designed to stem any further weakening in property prices, and are not targeted at saving property developers from restructuring or eventual default. Despite the surprising turnaround in property bond valuations, we are maintaining our view that the deep and structural issues within China’s property market remain in place and have not been addressed by the policies announced so far.

What will surprise investors in 2025?

I am generally uncomfortable when valuations are pushed to historical levels, especially if these moves are relentless. Current tight credit spreads leave a low margin for error and result in little differentiation between credits. Going into 2025, bond price volatility looks likely to move higher under President-elect Trump’s new administration, at least in the short term. With as yet many unknowns, credit spreads could start to widen. Accidents can and do happen.

The bond markets were wrong-footed in 2023 and 2024 by expectations of a recession and overly dovish rate cut projections. 2025 may not be third-time lucky and investors should be ready for unforeseen circumstances. Our team favours short duration and absolute return focused strategies that can help counter the unexpected, yet are nimble enough to capitalise on market opportunities when presented.

Colin Ng

Head of Asia Equities

What surprised you most about 2024?

A number of positive policy announcements by the Chinese government in September suddenly spurred the market to become one of 2024’s stronger performers. After a series of disappointments, it will have come as a surprise to most that this year, China was able to turn around its 3-year bear market.

Policy announcements aside, investors were attracted to the China market’s attractive valuations. But just as importantly, I think the rally was the result of a step change in China’s political stance. Political leaders seem no longer willing to tolerate the consequences of a weakening economy and property sector downturn. I believe that as of 2024, they have started to show an increased determination to shore up the economy, especially given the potential for Trump to raise the stakes.

What will surprise investors in 2025?

In my opinion and those of my colleagues, fears of a highly damaging US-China Trade War 2.0 are overblown. President-elect Trump's background as a businessman and his track record suggest that, beyond the headlines, there is room for negotiation. Additionally, one of his key considerations must be the ‘boomerang’ effect of higher tariffs on US inflation, at a time when interest rate cuts are highly anticipated.

On China’s part, it could be argued that policy markers there has seen this all before. They are rumoured to have prepared a playbook designed to mitigate the Trump factor as and when required. China can also take some comfort from the fact that, thanks to its growing manufacturing capability in renewable sectors, an organic increase in exports is still possible. Re-shoring will also help to offset the worst effects of US tariffs.

As for the stock market, China equities could be 2025’s dark horse. Despite this year’s rally, markets still appear to be underestimating the monetary levers and structural opportunities available to China. Instead, investors seem to be overestimating the US’s commitment to protectionism at all costs. There is room here for markets to be positively surprised.