Trump could fuel inflation
According to Matthias Geissbühler, the US economy is expected to slow down somewhat in the coming months. “After solid GDP growth of between 2.7 and 2.8% in 2024, we expect a smaller increase of around 2% in 2025.”
Donald Trump’s return to power raises uncertainties. Deregulation and tax relief could certainly have positive effects in the short term, “but the policy of partitioning and the envisaged customs duties should increase volatility in the market,” says the investment manager. He highlights the risk of a lose-lose situation: “Higher tariffs are likely to continue to push up prices in the United States, while tougher immigration policy would put pressure on the labor market . These two factors would further fuel inflation.”
Europe is weakening
On a global scale, Matthias Geissbühler sees other risks that could weigh on the financial markets. “If conflicts like those in Ukraine or Taiwan continue to worsen, market collapses cannot be ruled out.” Furthermore, Japan and some European countries are on the verge of recession, and the investment specialist does not expect a major recovery in China either.
“We are not pessimistic and we do not expect a global recession. But growth, particularly in Europe, is expected to be weak,” explains Matthias Geissbühler. Europe is particularly vulnerable, as many countries are heavily dependent on manufacturing. Moreover, in Germany, the automobile industry and the chemical industry are already losing momentum. Added to this is a strong dependence of exports on China: “The real estate crisis and structural problems are weighing on the country’s growth.”
Growth, especially in Europe, expected to be weak
Matthias Geissbühler expects few growth impulses in Europe in the first six months of 2025. “Leading indicators, such as the purchasing managers index, continue to decline. Therefore, we cannot count on a short-term recovery in Europe: rather, a new decline is taking shape.” Political uncertainties in Germany and France, as well as questionable growth prospects in southern European countries, such as Spain and Italy, further aggravate the situation.
The drop in interest rates gives wings to real estate
Matthias Geissbühler views the second half of the year more positively: “By the end of 2025, the ECB should lower its key rate to 1.5% in order to stimulate the economy.” However, caution remains in order: “It is only when leading indicators show a constant increase over three months that the time will have come to resume investments in cyclical values,” says the Raiffeisen CIO. Currently, he sees potential in shorter-dated European bonds, but only if currency risks are hedged.
The interest rate reduction cycle is already more advanced in Switzerland. “I was surprised to learn that the SNB lowered its key rate by 0.5 percentage points in December. A reduction to 0% during the year no longer seems to be excluded.” This should stimulate the real estate market: “Real estate funds will then increasingly come back to the forefront, because they offer attractive distribution yields with prospects for price increases.”
Technology stocks, gold or cryptocurrencies?
The Magnificent Seven, the technology giants Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, have largely contributed to the stock market boom of 2024. These companies have experienced strong increases in prices: “Stock prices have increased in average of two thirds, while profits increased “only” by 30%. As a result, valuations have increased significantly,” explains Matthias Geissbühler. “Share prices already seem to have priced in future promises, for example regarding artificial intelligence.” The Raiffeisen expert expects a significant slowdown in growth in 2025 and recommends taking profits now.
Gold also reached new highs in 2024. “In addition to the decline in interest rates, the sharp rise in global debt as well as geopolitical uncertainties have contributed to this,” says Matthias Geissbühler. Added to this is the fact that many emerging countries have reduced their dollar reserves in favor of gold. “Gold still has its place in a diversified portfolio, even if we do not expect a further increase of 30% in 2025.”
On the other hand, he advises against cryptocurrencies: “They remain speculative and volatile. We prefer physical gold to digital gold.”
Fortune check-up at the start of the year
At the start of the year, it is always recommended to check your portfolio and make reallocations if necessary. “The strong stock market movements of 2024 have unbalanced many portfolios. It might therefore be wise to take part of the profits and make some reallocations.” Matthias Geissbühler recommends betting on conservative stocks with high dividends such as Novartis, Nestlé or Roche: “These securities offer security and solid distributions.”
Additionally, real assets like real estate and gold remain attractive, especially in a context of falling interest rates. The investment specialist emphasizes the importance of a strategic approach: “A wealth check-up at the start of the year can help you find the right balance and seize opportunities.” In doing so, it is important to ask yourself which assets you need and which you can do without. “Savings accounts hardly earn any interest anymore, and, adjusted for inflation, losses are possible. If you don’t need your money, it’s best to invest it in a broadly diversified way.”
Investment outlook 2025: join us
How will the economy and inflation evolve in 2025? What routes will the stock markets follow and where can we find attractive investment opportunities? Yvan Roduit, Head of Investment Advisory at Raiffeisen Switzerland, and Geoffroy Brochard, Senior Investment Advisor at Raiffeisen Switzerland, will provide you with first-hand information on Tuesday January 14, 2025 from 5:30 p.m. to 6:30 p.m. during a livestream on the 2025 investment outlook.
Register for free here
