J.P. Morgan Private Bank Unveils 2025 Global Investment Outlook

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Nov 18, 2024, 08:00 ET

NEW YORK, Nov. 18, 2024 /PRNewswire/ -- J.P. Morgan Private Bank today released its 2025 Global Investment Outlook, Building on Strength, which defines the pivotal themes poised to shape market dynamics in the upcoming year.

"It was a year of exceptional market performance, characterized by a decline in inflation, robust GDP growth, strong corporate profits, and easing monetary policy," said Grace Peters, Global Head of Investment Strategy at J.P. Morgan Private Bank.

"Looking ahead to 2025, investors are poised to build on this strength. With new frontiers in investments such as evergreen alternatives, accelerating capital investment, and transformative themes like artificial intelligence, investors can capitalize on emerging trends that can continue to propel the economy and markets forward."

"Our ultimate goal is to build resilient portfolios through income generation and diversification, which can help mitigate the impact against unexpected shocks."

To capitalize on the solid foundation provided by market gains in 2024, J.P. Morgan Private Bank's 2025 Global Investment Outlook features five important themes.

Easing global policy should bolster economic growth.

The continued global policy easing cycle is expected to continue into next year, with falling interest rates supporting economic growth in the United States and Eurozone without significantly boosting demand or reigniting inflation.

"In the U.S., bond market pricing implies an easing cycle that ends in the first quarter of 2026 with the policy rate near 3.5%," said Jacob Manoukian, U.S. Head of Investment Strategy. "This provides a supportive environment for risk assets, benefiting sectors like housing, commercial real estate, productivity, while also encouraging a nascent revival in dealmaking."

Capital investment is a megatrend driver powering the future.

With elevated margins, rising profits, increasing C-suite confidence, and policymakers focused on supporting growth, businesses and governments are primed to spend. Capital investment will be a critical driver of three global trends: artificial intelligence, power infrastructure, and security.

"We anticipate a surge in capital investment in the power sector, driven by the reindustrialization of U.S. manufacturing, increased electrification in clean energy solutions, and the rising demand from data centers," said Alex Wolf, Asia Head of Investment Strategy. "This strong investment backdrop isn't just confined to the U.S., Japan is at the forefront of many of these structural trends and we see capital investment rising as a result."

Europe's global giants offer resilience and opportunities for returns.

"Despite Europe's productivity challenges, we believe that investors should not overlook the top European companies in 2025. It is important to remember that the 50 largest European companies derive only ~40% of their revenues from Europe, making the 'national champions' within this cohort genuine global players," said Erik Wytenus, Europe, Middle East, and Africa Head of Investment Strategy. "While 'US exceptionalism' is a theme with sound rationale, we also advocate complementing US positions with international diversification, including in Europe, which is aided by the ECB's policy easing."

Additionally, investors can enhance portfolio resiliency by considering real assets and income to potentially better withstand unexpected shocks.

Embrace innovative investment frontiers in alternatives.

"Investment innovation sometimes comes in waves; we're hopeful that 2025 will see a surge of innovation as the industry explores new frontiers including evergreen alternatives, sports, space and urban development," said Thomas Kennedy, Chief Investment Strategist.

"Open-ended evergreen alternative funds are rising in popularity, with 50% of our alternative commitments in 2024 being in evergreen fund structures, up 3x from the prior year. These pioneering investment strategies and opportunities, while not core to every portfolio, offer potential for growth and diversification in a rapidly changing world."

Focus on policy impact over election outcomes.

After this year's election results spotlighting the power of anti-establishment movements, many investors are considering the trajectory for sovereign debt and deficits. However, investor focus should now shift from election outcomes to policy impact on the economic and investment landscape.

"Latin America was at the forefront of the global easing cycle, which has helped sustain growth and economic activity across the region. However, 'fiscal activism' from governments can de-anchor inflation expectations and derail monetary efforts, posing a risk to the expansionary cycle." said Nur Cristiani, Latin America Head of Investment Strategy.

"As investors navigate global shifts in governing power, they should monitor the risks posed by anti-establishment politicians. Beyond right and left, the rise of anti-establishment parties could increase political and economic volatility, highlighting the need for resilient investment portfolios."

Learn more about J.P. Morgan Private Bank's 2025 Global Investment Outlook and download the full report here.

About J.P. Morgan Private Bank

J.P. Morgan Private Bank provides customized financial advice to help wealthy clients and their families achieve their goals through an elevated experience. Clients of the Private Bank work with dedicated teams of specialists that bring their investments and financial assets together into one comprehensive strategy, leveraging the global resources of J.P. Morgan across planning, investing, lending, banking, philanthropy, family office management, fiduciary services, special advisory services and more. The Private Bank oversees more than $2.8 trillion in client assets globally (as of 9/30/2024). More information about J.P. Morgan Private Bank is available at privatebank.jpmorgan.com.

Key Risks

The price of equity securities may rise or fall due to the changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Equity securities are subject to "stock market risk" meaning that stock prices in general may decline over short or extended periods of time.

Investment in alternative investment strategies is speculative, often involves a greater degree of risk than traditional investments including limited liquidity and limited transparency, among other factors and should only be considered by sophisticated investors with the financial capability to accept the loss of all or part of the assets devoted to such strategies.

Bonds are subject to interest rate risk, credit and default risk of the issuer. Bond prices generally fall when interest rates rise.

International investments may not be suitable for all investors. International investing involves a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies outside the U.S. can raise or lower returns. Some overseas markets may not be as politically and economically stable as the United States and other nations. Investments in international markets can be more volatile.

SOURCE J.P. Morgan Private Bank