Outlook for Major Asset Classes in 2025

 

 

I. Macroeconomic Background

The macroeconomic environment in 2025 will be influenced by a variety of factors, including external economic policies, market expectations, and changes in the international situation. These data reflect the government's proactive stance on fiscal spending, which helps to stabilize economic growth.

Furthermore, efforts to promote the healthy development of the platform economy emphasize increasing the counter-cyclical adjustment of fiscal and monetary policies to ensure necessary fiscal spending.

 

II. Asset Allocation Recommendations

In the asset allocation for 2025, the recommended order is: stocks > commodities > bonds > currency. This allocation order is based on a comprehensive judgment of the macroeconomic environment and market expectations.

1. Stock Market: The stock market is expected to continue benefiting from policy support and economic recovery. Particularly, assets in financial real estate and debt-benefit categories, new quality productive forces with high elasticity, "two heavy" and "two new" assets benefiting from fiscal policies, and directions such as service consumption and potential beneficiaries of the deepening supply-side reform theme. These areas, under policy support, are expected to present good investment opportunities.

Advertisement

2. Commodities: The commodities market may continue to be driven by global economic recovery and increasing demand in 2025. Particularly, energy and metal commodities may benefit from the recovery of infrastructure construction and manufacturing.

3. Bond Market: The bond market may face certain pressures in 2025. On one hand, economic recovery and rising inflation expectations may push up interest rates; on the other hand, the issuance of government bonds may increase, affecting market liquidity. However, for long-term investors, high-quality credit bonds and interest rate bonds still have certain allocation value.

4. Money Market: The money market may remain relatively stable in 2025. As the economy gradually recovers, the market's demand for liquidity may increase, but the central bank may maintain market interest rates through various tools.

III. Outlook for the REITs Market

The Chinese REITs market is expected to continue showing a good development momentum in 2025. The continuation of policy dividends, acceleration in the issuance of primary market, and valuation repair and differentiation in the secondary market are the three characteristics of the 2024 REITs market. Looking forward to 2025, under the baseline scenario where both supply and demand sides of the REITs market exert efforts simultaneously, the market may maintain its structural market characteristics, with sector performance differentiated according to fundamental differences.

1. Industrial Parks: Pressures on both the supply and demand sides still exist, prolonging the bottoming cycle. It is recommended to focus on some factories and R&D office projects with relatively longer remaining lease terms and more stable operating fundamentals.

2. Logistics and Warehousing: The addition of new supply may slow down, but the relatively weak demand still intensifies asset competition, and the trend of "exchanging price for volume" may continue, with rental levels further bottoming out. In the short term, it is recommended to focus on opportunities to enter after price adjustments in whole-lease projects; in the medium term, it is recommended to continue to focus on the configuration value of projects operated by leading operators.

3. Affordable Housing: The operational resilience is expected to be maintained, and it is recommended to focus on policy projects with higher operational certainty.

4. Consumption: Against the backdrop of macroeconomic policies to promote consumption, the overall cost-effectiveness of sector allocation has improved, and it is recommended to focus on projects operated by leading operators first, and then on some projects benefiting from the trend of tiered consumption.

IV. International Economic and Policy Tracking

1. United States: October existing home sales rebounded more than expected year-on-year, while the number of started new private residential buildings fell year-on-year; the 30-year mortgage rate rebounded to 6.8%, still at a historical high; both Markit manufacturing and service PMI rebounded in November. Inflation expectations have rebounded, and expectations for a rate cut in December continue to fall.

2. Europe: In November, the Eurozone PMI fell below the boom-or-bust line, and the consumer confidence index fell. The European Central Bank may cut rates by 25BP in December.

3. Japan: Whether the Bank of Japan will raise interest rates still needs to be observed.

 

V. Risk Warnings

Global inflation falls slowly: If global inflation falls slower than expected, it may affect monetary policy and market expectations.

Fast economic decline in Europe and the United States: A rapid decline in the economies of Europe and the United States may trigger global market fluctuations.

Complicated international situation: A complicated international situation may increase market uncertainty and affect investor confidence.

In summary, the asset allocation recommendation for 2025 is stocks > commodities > bonds > currency. The REITs market is expected to continue showing a good development momentum, but it is necessary to pay attention to the fundamental differences among different sectors. Changes in the international economy and policies will also have an important impact on the market, and investors need to closely monitor relevant dynamics and adjust investment strategies flexibly.