Executive Summary
Global asset class performance has shifted direction in February 2025, with Bonds outperforming Equities and alternative like Crypto — signalling potential trouble ahead. U.S. markets have been pinned down by the weakness in M-7 stocks, which were frothy darlings for the markets in 2024. The U.S. President’s daily gyrations have set a new chaotic tempo, to which global markets have started to dance. With China, Mexico and Canada facing the heat in terms of tariffs right now, Asia (ex-China) and the EU may well have to be prepared when Trump turns his attention to them. Trump’s trade spats have strengthened an already overvalued U.S. Dollar, potentially leading to a slowdown of global trade growth, increasing cost of exports for trade reliant nations, and adding to the debt burden for EMs that have borrowed in USD. However, after a decade of overvaluation, the US Dollar could face a setback if inflation cools down faster than expected by mid-2025. Private equity acquisitions appear attractive with EV/EBITDA multiples that are at a deep discount to that of public companies. Although private equity exits have been a slog, green shoots are emerging, with capital distributed now outpacing capital called. Nevertheless, valuing illiquid assets with uneven cash flows remains a puzzle.
