INVESTMENT STRATEGY MAY 2025 PDF Free Download
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Investment Strategy
MAY 2025
May 2025
CIO and Partner
Michael Foo
Asset classes
Equities
Updates:
US: S&P 500 nears bull case, but tari risks remain.
Large-cap tech resilient
Europe: NATO defence spending supports, but
divisions persist
Japan: Stable macro, yet yen strength a risk
China: Exports slow; AI stimulus oers medium-
term positives.
Our View:
US: Stay cautious near highs; tari risks
unresolved
Europe: Neutral stance supported by defence/
energy but challenges remain
Japan: Neutral; attractive valuations oset by yen
strength and lack of catalysts
China: Neutral, but buyers on dips amid policy
and trade shifts.
The US may be dialling back some tariff aggression, but we are not buying into a full equity bull trend yet. Effective
tariffs are likely to persist, and markets may face challenges as hard data softens. We will continue using market
gyrations to realign with our Strategic Asset Allocation (SAA), maintaining risk discipline and a long-term focus..
FX / Gold
Updates:
USD:
haven role in Trade
W
ar
2
remains uncertain.
Gold:
preferred hedge for policy and geopolitical
risks.
H
aving hit the near-term target of
3
,
4
00, we
have partially trimmed positions.
Our View:
USD:
settled below
1
00 after sharp decline; slightly
oversold near term despite de-dollarisation
Gold:
plan to top up at
$3
,
1
00 with
$3
,500 target,
supported by central bank demand and de-
dollarisation.
R
ates
Updates:
The
U
S yield curve is a wild card at
4
.
3%
, with the
1
0-year swinging either way on policy shifts.
Our View:
M
aintain
U
nderweight in government bonds.
Credit
Updates:
Credit spreads have normali
z
ed post-Liberation
D
ay blowout, with no signs of systemic stress.
Our View:
M
aintain preference for I
G
bonds over
HY
, and stay
low in duration.
C
I
O t
hough
ts
US
Consumer front-loading attered Q1 consumption,
but higher taris and slowing income growth will
weigh heavily from Q2, with real sales expected to
slow sharply
Labour market remains resilient for now;
unemployment steady and wage growth cooling.
However, policy uncertainty raises risks
Surveys signal growing pessimism, with rms cutting
capex and consumers expecting higher ination —
the worst sentiment in 35 years
Firms plan to pass tari-driven cost increases to
consumers. Soft data has deteriorated rapidly, but
limited tightening of nancial conditions will delay
rate cuts.
Macroeconomic Outlook
The global picture is shifting as tariff-related distortions fade. In the US, frontloaded spending flattered Q1 data, but
rising prices and slower income growth should weigh on Q2. Labour remains resilient, yet sentiment and capex are
falling as firms pass costs to consumers. Europe’s rebound risks stalling amid tariff headwinds. Meanwhile, China’s
momentum reversed sharply, though redirected trade and monetary easing may soften the blow. Central banks are
likely to remain cautious.
Europe
Euro area manufacturing data remain solid, but soft
data — consumer condence and unemployment
expectations — highlight growing tari-related
headwinds
Q1 GDP rose 1% annualized, but sentiment has
deteriorated, suggesting the rebound is unsustainable
US tari shock likely to delay Europe’s cyclical rebound,
with growth momentum set to weaken through Q2
and Q3
Fiscal support and disination, aided by redirected
Chinese exports, should help recovery into 2026.
Markets expect the ECB to deliver three more rate cuts.
China
China’s April PMIs fell sharply, with new export orders
down, though freight volumes from major ports remain
resilient as exporters redirect shipments
Sentiment turned sharply on US tari hikes, but
exibility in implementation and a 90-day pause may
delay and soften the drag
Export-driven momentum faded after Q1’s AI and front-
loading boost, pointing to slower growth ahead
Fiscal support may be constrained, leaving monetary
easing — including PBOC rate and RRR cuts —
as the preferred tool to stabilise growth.
Disclaimer
This document was produced by and the opinions expressed are those of HP Wealth Management Singapore Pte Ltd (HPWM) as of the date of writing, and are subject to change without notice.
The document has been prepared solely for information purposes and for the use of the recipient. It does not constitute an oer or an invitation by or on behalf of HPWM to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future.
The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable and credible but HPWM does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof. The issuer of
the securities referred herein or HPWM may have acted upon the information and analysis contained in this publication before being made available to clients of HPWM.
Investments in foreign currencies are subject to exchange rate uctuations. Before entering into any transaction, you should consider the suitability of the transaction to your particular circumstances and independently review (with your professional advisers as necessary) the specic nancial risks as well as
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May 2025
Head of Fixed Income
Edwin Chan
