Emirates NBD Group Chief Investment Office announces global outlook for 2025 Winds of Change
Speaking to the media, Gravier and his team presented their investment strategy for the year ahead, which starts with improved visibility and strong financial returns from 2024, 'The Year of Answers'.
Opening the discussion, Gravier said: 'By contrast to 2024, attention should switch from the present to the future, due to material emerging changes. New leaders will implement new policies, while the geopolitical picture will evolve, commercially and militarily. National and regional priorities should prevail and create divergences.'
He added: 'We believe that macro-economic uncertainty, driven by political changes, could prove much higher than the consensus suggests. This is not adverse for long-term investors: markets overreact on surprises, providing opportunities for those who keep the medium-term picture in mind. Volatility and divergences are a pool of alpha for active allocation and selection. To that extent, Emirates NBD's Group Chief Investment Office has added two new functions in 2024: quantitative tactical analysis to identify short-term signals, starting with FX and commodities, and onshore bespoke discretionary portfolio management, to constantly and swiftly adjust positioning on behalf of Private Banking clients, under their very own guidelines.'
On the economic outlook, Gravier said: 'Our Emirates NBD Research Team expects a stable but moderate global growth in 2025, similar to 2024 on aggregate but with regional differences. The US should continue to shine while the Euro area is in a more lacklustre configuration. China and India should marginally slow. By contrast, headline GDP growth in the GCC should accelerate to a very solid 3.5%, with a strong performance from non-oil sectors, and a diminishing year-on-year drag from the oil sector.'
'As for the long-run, our models suggest lower expected returns for the decade ahead compared to the previous one, as well as a growing appeal for some alternative asset classes. The year ahead should be positive but also volatile: we will see potentially spectacular policy decisions from major economies, and potential overreaction from financial markets. The permanence of US exceptionalism could be challenged at some point, but we do not expect an overly aggressive stance from the new US administration.'
Gravier affirmed: 'We see 2025 as a year of regime change for fixed income investors, which implies some level of volatility and potential turbulences. Still, there are positive news: the defensive end of the fixed income universe is attractive, which is why we favour quality government bonds which should provide decent returns, as they usually do after a bear-steepening episode. We are more neutral, for the time being, on other segments, as spreads are historically tight. GCC bonds provide attractive yields while we expect another year of high issuance.'
On equity, he remarked: '2025 should not be about passivity for equity investors, as changing regional dynamics, led by policy impulses, will meet currently polarised valuations. The good news is that with a still favourable macro environment and positive AI megatrend, we expect continued earnings growth momentum to support markets overall, despite limited likelihood of multiple expansion. Whilst volatility remains on our radar, our outlook suggests a 10% return for global equities. We start the year by following positioning: overweight US and Japan within developed markets, while favouring India and the UAE in emerging regions.'
The annual global investment outlook announced by the Group Chief Investment Officer at Emirates NBD is an advisory blueprint covering investment opportunities, key global economic indicators and in-depth financial market insights, based on which Emirates NBD's team of advisors, strategists and analysts make recommendations on financial transactions and investments to the bank's qualified clients.
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