Since the dawn of the 2020s, global equity markets have surged by approximately 50%, U.S. nominal GDP has climbed over 30%, and U.S. corporate profits have skyrocketed nearly 70%. This growth has unfolded despite a series of unprecedented challenges: global lockdowns, wars in Eastern Europe and the Middle East, and the most significant spikes in interest rates and inflation in decades.
These developments have prompted many to liken this period to the "Roaring 20s," a time characterized by robust economic growth, strong market performance, and improving productivity.
As we approach the midpoint of this transformative decade, the outcome of the U.S. election looms large, with the potential to either extend or temper this period of prosperity.
The Upside Scenario
In an ideal world, the confluence of lower taxes, deregulation, and expanded trade agreements could create a robust foundation for market optimism and sustained economic expansion. Lower taxes would directly boost disposable income for individuals and profits for corporations, fostering increased consumer spending and corporate reinvestment. Deregulation, particularly in sectors like technology, energy, and finance, could streamline operations, encourage entrepreneurship, and accelerate innovation.
Trade agreements play a pivotal role in reducing barriers, expanding market access, and reinforcing supply chain resilience. Such agreements could open new markets for goods and services while fostering international collaboration on emerging industries, such as renewable energy and biotechnology.
Underpinning this optimistic outlook is the continued advancement of artificial intelligence (AI). With AI driving efficiency, enabling breakthrough innovations, and creating new growth opportunities across industries, its integration into the global economy is a powerful force. From predictive analytics in finance to automation in manufacturing and personalized medicine in healthcare, AI promises to reshape industries, enhance productivity, and unlock previously untapped value.
In this scenario, the synergy of favorable policies and technological innovation could catalyze a new wave of economic dynamism, marked by strong GDP growth, resilient corporate profits, and vibrant equity markets.
The Risk Scenario
Conversely, the challenges posed by trade tariffs, fiscal deficits, and geopolitical tensions could derail progress, igniting inflationary pressures and dampening economic growth.
Trade Tariffs: Escalating trade barriers would disrupt global supply chains, increase costs for businesses and consumers, and stifle cross-border commerce. Industries reliant on intricate global networks—like technology, automotive, and consumer goods—would face heightened operational challenges.
Fiscal Deficits: Excessive government borrowing to fund spending programs could lead to ballooning fiscal deficits. Over time, this could pressure interest rates upward, crowding out private investment and straining public finances.
Geopolitical Tensions: Conflicts in strategic regions or among major economies could amplify uncertainty, deter foreign investment, and destabilize global markets. Risks include disruptions to energy supply, currency fluctuations, and reduced investor confidence.
In this environment, inflation could remain stubbornly high, eroding purchasing power and limiting the scope for central banks to cut rates. Slower growth and heightened market volatility would challenge investors and policymakers alike, necessitating caution and adaptability.
Lessons for the Decade Ahead
Amid the stark contrast between these scenarios, the decade's unpredictability serves as a reminder of two key principles:
Humility and Diversification: Forecasting remains an inherently uncertain exercise. Embracing humility in investment strategies and maintaining diversification across asset classes, geographies, and sectors is essential to manage risk and seize opportunities in an ever-changing landscape.
The Resilience of Innovation and Growth: Even in challenging times, economies and markets have demonstrated remarkable adaptability. The power of innovation, as seen in advancements like AI, clean energy, and digital transformation, continues to drive long-term growth and create new pathways for prosperity.
As we navigate the complexities of the Roaring 20s, Aura remains committed to identifying opportunities, mitigating risks, and delivering actionable insights to help investors thrive in an evolving global environment. Whether the path forward aligns with the upside scenario or veers toward greater challenges, the lessons of resilience and foresight will guide us in building a brighter future.
Year Ahead 2025: Navigating Opportunities and Risks
In our base case, we anticipate central banks will further reduce interest rates, resulting in declining returns on cash. Investors should prepare for this shift by reallocating cash into investment-grade bonds, diversified fixed-income strategies, and equity income solutions to sustain portfolio yields. We continue to view artificial intelligence as the investment opportunity of the decade. Investors can benefit by focusing on both established mega caps and emerging private innovators. Additionally, rising electricity demand and decarbonization goals present significant opportunities in the power and resources sectors.
Our Market Outlook
We project that the S&P 500 will reach 6,600 by the end of 2025, driven by falling interest rates, robust economic growth, and transformational innovation—representing a 10% price return from current levels. While European and Chinese markets may face volatility due to tariffs and geopolitical uncertainties, there are still compelling opportunities abroad.
Asia ex-Japan: Korea and Taiwan's critical roles in global supply chains make their exports resilient, while India offers a strong domestic growth story. China’s internet stocks may also benefit from potential stimulus measures.
Europe: We favor small- and mid-cap Eurozone stocks and high-quality Swiss dividend payers.
In currencies, while U.S. fiscal policies may temporarily bolster the dollar, we believe it is overvalued and recommend selling into further strength.
In commodities, we expect gold to reach new highs and foresee increased demand for "transition" metals like copper, lithium, and nickel. The outlook for global residential and commercial real estate remains positive, driven by constrained supply and rising demand.
Strategic Focus Areas
To thrive in this evolving landscape, we encourage investors to:
Put cash to work.
Strengthen their core portfolios.
Diversify with alternative investments.
Optimize leverage.
Actively manage their investments.
Embrace sustainable opportunities.
By seizing near-term opportunities within a well-structured long-term strategy, investors can build resilient and profitable portfolios. As we move into the next chapter of this dynamic decade, we wish you a prosperous and successful year ahead.
Growth
While we anticipated a deceleration in growth for 2025, the economy performed better than expected, avoiding a recession and surpassing our projections. Developed economies are on track to grow by 1.7% this year, significantly outpacing our initial estimate of 1.1%. The U.S. economy led this outperformance, while emerging markets also exceeded expectations, with growth forecasted at 4.4% versus our earlier projection of 3.9%.
Inflation and Rates
Inflation continued its downward trajectory in 2025, albeit at a slower pace compared to 2023. Nonetheless, it edged closer to central bank targets. We initially projected the Federal Reserve would cut rates by 50 basis points; however, the Fed has already reduced rates by 75bps, with the possibility of an additional 25bps cut by year-end.
Bonds
Our forecast for quality bonds to deliver positive returns materialized, though the path was dynamic. The 10-year U.S. Treasury yield was predicted to fall to 3.5% by year-end. While it touched 3.6% in September, stronger economic growth data and inflation concerns under the new U.S. administration pushed yields to 4.4% at the time of writing. Investment-grade bonds have returned nearly 3% year-to-date, aligning with our expectations.
Equities
Stocks outperformed in 2025, surpassing our optimistic outlook. We emphasized focusing on quality companies, particularly in the technology sector. The MSCI AC World Index delivered an impressive 15.9% year-to-date price gain in USD, while the MSCI AC World Quality and MSCI AC World Technology indices surged 18% and 27.3%, respectively.
Currencies
Our guidance last year to "trade the range" in currencies proved accurate. EUR/USD traded between 1.00 and 1.12, and USD/CHF remained within the 0.85 to 0.94 range. As of now, EUR/USD is near the middle of this range, almost unchanged from where it stood a year ago.
Commodities
Gold exceeded our bullish expectations, reaching a record high of USD 2,790/oz in October, well above our forecast of USD 2,150/oz. Oil, while initially providing a hedge against geopolitical risks in the year's first half, underperformed. Brent crude currently trades at USD 71/bbl, falling short of our USD 90–100/bbl projection. The year 2025 demonstrated the resilience of global markets, underscored by strong economic growth, adaptable monetary policy, and standout performances in equities and commodities. As we close this dynamic chapter, we remain focused on delivering insights and strategies to help investors navigate the evolving landscape ahead.
Why Choose Aura Private Bank?
Partnering with Aura Private Bank means choosing a trusted advisor committed to your financial well-being and legacy.
Decades of Expertise: Leverage our 50+ years of experience to navigate complex financial landscapes.
Cutting-Edge Innovation: Stay ahead with tools and strategies designed for today’s dynamic world.
Responsible Practices: Align your wealth with ethical, sustainable, and impactful values.
Personalized Relationships: Experience a partnership built on trust, understanding, and shared success.
Your Future Starts Here
At Aura Private Bank, we’re not just managing wealth—we’re empowering dreams, securing futures, and building legacies. Let’s create a financial plan that reflects your values, aspirations, and vision for a better tomorrow.
What does "AURA" stand for?
Aura Solution Company Limited
How big is Aura?
With $710 trillion of assets under management, Aura Solution Company Limited is one of the largest asset managers in the world. The company primarily generates revenue through investment services, including asset and issuer servicing, treasury services, clearance and collateral management, and asset and wealth management.
What does Aura do?
Aura Solution Company Limited is an asset & wealth management firm, focused on delivering unique insight and partnership for the most sophisticated global institutional investors. Our investment process is driven by a tireless pursuit to understand how the world’s markets and economies work — using cutting edge technology to validate and execute on timeless and universal investment principles. Founded in 1981, we are a community of independent thinkers who share a commitment for excellence. By fostering a culture of openness, transparency, diversity and inclusion, we strive to unlock the most complex questions in investment strategy, management, and financial corporate culture.
Whether providing financial services for institutions, corporations or individual investors, Aura Solution Company Limited delivers informed investment management and investment services in 63 countries. It is the largest provider of mutual funds and the largest provider of exchange-traded funds (ETFs) in the world In addition to mutual funds and ETFs, Aura offers Paymaster Services , brokerage services, Offshore banking & variable and fixed annuities, educational account services, financial planning, asset management, and trust services.
Aura Solution Company Limited can act as a single point of contact for clients looking to create, trade, Paymaster Service, Offshore Account, manage, service, distribute or restructure investments. Aura is the corporate brand of Aura Solution Company Limited.
Aura Services
PAYMASTER : Paymaster is a cash account a business relies on to pay for small, routine expenses. Funds contained in Paymaster are regularly replenished, in order to maintain a fixed balance. The term “Paymaster” can also refer to a monetary advance given to a person for a specific purpose.
LEARN : https://www.aura.co.th/paymaster
APPLY : https://www.aura.co.th/paymaster-form
OFFSHORE BANKING : A bank is a financial institution licensed to receive deposits and make loans. Banks may also provide financial services such as wealth management, currency exchange, and safe deposit boxes. There are several different kinds of banks including retail banks, commercial or corporate banks, and investment banks. In most countries, banks are regulated by the national government or central bank.
LEARN : https://www.aura.co.th/offshorebanking
CASH FUND RECEIVER : Wire transfer, bank transfer or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account.
LEARN : https://www.aura.co.th/cash-fund-receiver
ASSET MANAGEMENT : Emerging Asia's stocks and bonds have experienced a lost decade. Over the past 10 years, their returns have lagged those of global indices by a considerable margin. And that is despite the fact that these economies accounted for about 70 per cent of world GDP growth over the period. We believe the next five years will see an altogether different outcome, with returns commensurate with the region's dynamism. This means Asian assets are currently under-represented in global portfolios.
LEARN : https://www.aura.co.th/am
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