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Not business as usual: quality and diversification critical amid geopolitical and macro uncertainty

Not business as usual: quality and diversification critical amid geopolitical and macro uncertainty

On 27 March 2025, The Private Wealth Sessions at HSBC’s Global Investment Summit attracted a cohort of more than 600 individual investors, entrepreneurs and senior executives, and provided them with exclusive insights from globally influential experts, investment leaders and innovators.

Against a backdrop of evolving trade policies, electoral upheavals, and technological disruptions, our first insight article captures fresh views from our guest speakers on how geopolitical and macroeconomic shifts will shape risks and opportunities for investors in the years ahead. 

With 64 jurisdictions holding elections last year, and new governments formed in many major economies, the global policy landscape is evolving fast. In particular, the new US administration is challenging many investors to rethink their approach and ask different questions.

“The new administration in the United States is a profoundly radical and revolutionary administration: this is not business as usual,” said Martin Wolf, Associate Editor and Chief Economics Commentator at the Financial Times.

Investors need to think differently to succeed in this new reality, said Ali Dibadj, Chief Executive Officer at Janus Henderson Investors. “We have to think about politics as an investment lever. It was historically put aside. Investors might not like to think about politics; well, now you have to.” 

Mr. Dibadj added that, in times of economic uncertainty, it paid to stay invested but also to be dynamic. For example, he argued that quality becomes a key consideration because the earnings and cashflows of better companies do better than those of other firms.

While speakers said the uncertainty caused by tariffs and cuts to government spending was weighing on US business sentiment and markets, they also highlighted the importance of diversification. 

“If there's one message you remember from everything here, you should remember diversification, because nobody would have guessed that Europe was going to be the top stock market,” said Jenny Johnson, President and Chief Executive Officer at Franklin Templeton, reflecting on how European equities have outperformed US stocks in the year to date. 

“Whether it's COVID, the Ukraine war, the global financial crisis or the DeepSeek moment, there's always something that you never think of. The most resilient portfolio is a diversified portfolio.”

President Trump’s proposed extension of the tax cuts passed under his first administration in 2017 would be a positive for markets, speakers said, although they would weaken the US’s fiscal position, according to Gene Sperling of Sperling Economic Strategies, who is an advisor to PIMCO on US policy and held senior economic positions in the Clinton, Obama and Biden administrations. “The tax relief that President Trump promised on the campaign is going to be larger than even the most aggressive spending cuts in the United States.”

Internationally, though, the administration’s focus on preventing conflict could be positive for Asia, said George Yeo, Visiting Scholar at the Lee Kuan Yew School of Public Policy, National University of Singapore and Former Singapore Foreign Minister. “US-China relations will stabilise. They may not improve much, but they won’t get worse,” he said, explaining further that, “If we enjoyed another generation of peace, this will be an incredible region driving the global economy. The region is on the move...China's economy is recovering.” 

HSBC upgraded its forecast for China's 2025 GDP growth from 4.5 per cent to 4.8 per cent earlier in March, and speakers at The Private Wealth Sessions agreed that multiple sectors in Asia’s largest economy look attractive for investors – especially since Chinese AI breakthroughs by DeepSeek captured the world’s attention earlier this year. “We are seeing a lot of innovation taking place, reigniting investor optimism," said Jean Hynes, Chief Executive Officer and Managing Partner of Wellington Management. "Markets consistently follow earnings, so if earnings improve due to technological advancements, there is greater potential for capital to return."

For investors in Asia and around the world, the continuing uncertainty around geopolitics and the macroeconomic outlook will remain a critical factor in decisions throughout 2025. 

As Dr Helen Belopolsky, Global Head of Geopolitical Risk at HSBC, summed it up: “If we thought last year was chaotic and transformational – with the biggest election year in history, more than 50 per cent of the world's population going to the polls, increasing friction in trade and two wars – then we haven't seen anything yet. This year is more transformational still.”

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