Equity investors will have to cope with greater trade protectionism and regional rivalry, delayed climate transition, and technological transformation in the next decade. In our 2025 Capital Market Assumptions – which examine long-term return expectations for 40 global asset classes – we see shifting dynamics across equity markets, characterised by strong earnings growth in select regions, tempered by valuation challenges.
- Emerging market equities are positioned to outperform developed ones over the next decade. The US-China tech rivalry will particularly benefit India due to its growing start-up ecosystem and role as an alternative innovation hub.
- US equities may face some valuation challenges despite strong earnings growth. The weight of seven companies in the market capitalization creates vulnerability to shifts in sentiment and geopolitical risks in the coming years.
- Sector allocation will be crucial for investors, with Artificial Intelligence supporting IT and Healthcare, capital expenditure trends favouring Industrials over Consumer sectors, and deregulation policies benefiting Financials across different regions.
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