{"id":348157,"date":"2025-12-17T14:00:47","date_gmt":"2025-12-17T14:00:47","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/insurance\/empire-life-blog-2025-semi-annual-market-outlook-global-equities\/"},"modified":"2025-12-17T14:00:47","modified_gmt":"2025-12-17T14:00:47","slug":"empire-life-blog-2025-semi-annual-market-outlook-global-equities","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=348157","title":{"rendered":"Empire Life Blog 2025 Semi-annual Market Outlook: Global equities"},"content":{"rendered":"


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\"Busy<\/p>\n

This mid-year economic update examines significant equity shifts to Europe due to U.S. policy uncertainty and Europe’s strengthening conditions. It also details Japan’s inflation issues and BOJ limitations, alongside China’s property sector woes and modest stimulus.<\/em><\/p>\n

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Overview\u00a0<\/span><\/p>\n

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MID-YEAR HIGHLIGHTS<\/strong><\/span><\/td>\n<\/tr>\n
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  • Uncertainty in U.S. policy has spurred significant equity inflows into Europe, driven by improving fundamentals, increased fiscal\/defense spending, and attractive valuations.<\/li>\n
  • Japan faces high inflation and limited BOJ policy flexibility due to debt.<\/li>\n
  • China\u2019s economy faces property sector challenges and limited stimulus.<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

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    Trade tensions and tariff uncertainty have predominantly occupied headlines, introducing significant complexity to the global macroeconomic landscape. One might have anticipated this to hinder equity performance; however, EAFE markets demonstrated a remarkable 15% gain in the first half of the year. We posit that several underlying factors contributed to this resilience, warranting closer examination.<\/p>\n

    Outlook<\/strong><\/span><\/span><\/p>\n

    Europe<\/p>\n

    \"ImageIn Europe, the ongoing uncertainty surrounding U.S. policy appears to have catalyzed a substantial shift in equity flows into the region\u2014a notable reversal following years of outflows. While the diminished appeal of U.S. assets may have played a role, we contend that the narrative in Europe also hinges on improving fundamentals. Key economies, including Germany, have committed to augmenting fiscal spending, and defence budgets across the continent are on the rise. We maintain our exposure to these defence-related themes and believe that this and broader infrastructure spend could provide a multi-year tailwind to regional GDP. Thus far, our constructive outlook on European equities has proved fortuitous. We believe that potential rate declines in conjunction with still-attractive valuations may continue to support performance. During recent meetings with over 30 European management teams, we observed cautious optimism. While certain risks persist\u2014particularly those associated with China and global trade\u2014we have modestly adjusted our outlook to account for slightly stronger domestic growth coupled with a more challenging external environment.\u00a0<\/p>\n

    Japan<\/span><\/p>\n

    Japan presents a more complex scenario. \"SkyscrapersInflation has reached multiyear highs, diminishing consumer purchasing power. Nonetheless, the Bank of Japan remains constrained in its capacity to tighten policy due to elevated debt levels, demographic headwinds, and uncertainty around U.S. interest rates. In light of this, we have positioned ourselves within sectors such as discount retail and financials, which we believe may benefit from the current conditions. Nevertheless, we have tempered our optimism regarding Japan. It remains a cyclical market, and we believe that persistent inflation, limited policy flexibility, and the absence of substantial stimulus from China could exert pressure on near-term performance. Additionally, momentum toward governance reform appears to have decelerated. While valuations still appear attractive, we currently perceive no clear catalysts for broad-based upside.\u00a0\u00a0<\/p>\n

    \"Japan<\/p>\n

    Source: Bloomberg, as of April 30, 2025<\/p>\n

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    China<\/p>\n

    \"AIn China, fleeting indications of improvement within the property <\/span>sector did not sustain. The broader economy continues to grapple with <\/span>significant challenges, and substantial stimulus has yet to materialize. <\/span>Our overall stance on China remains cautious, albeit nuanced. Several <\/span>companies we monitor have reported indications that conditions may <\/span>be stabilizing. While this is not yet a definitive inflection point, we are <\/span>closely monitoring the situation. Despite macroeconomic headwinds <\/span>and elevated tariffs, Chinese equities exhibited strong performance in <\/span>the first half of the year, with the Hang Seng recording a 15% gain. Our <\/span>exposure to high-quality technology firms enabled us to participate <\/span>in this upside. Our positions are in large businesses with very strong <\/span>competitive \u201cmoats,\u201d and we believe they can continue to grow even <\/span>in a weak economy. For now, we maintain our positions and adopt a <\/span>measured, \u201cwait and see\u201d approach. Should confidence improve, we <\/span>would likely augment our exposure through global companies with <\/span>substantial Chinese operations.\u00a0\u00a0<\/span><\/p>\n

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    \"download-blue\" Download the full Empire Life 2025 Semi-annual Market Outlook (PDF).\u00a0<\/span><\/span><\/a><\/p>\n\n

    This document reflects the views of Empire Life as of the date published. The information in this document is for general information purposes <\/span>only and is not to be construed as providing legal, tax, financial or professional advice. The Empire Life Insurance Company assumes no <\/span>responsibility for any reliance on or misuse or omissions of the information contained in this document. Information contained in this report has <\/span>been obtained from third party sources believed to be reliable, but accuracy cannot be guaranteed. Please seek professional advice before making <\/span>any decisions.<\/span>
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    Empire Life Investments Inc. is the Portfolio Manager of certain Empire Life segregated funds. Empire Life Investments Inc. is a wholly-owned <\/span>subsidiary of The Empire Life Insurance Company.<\/span>
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    Segregated fund contracts are issued by The Empire Life Insurance Company (\u201cEmpire Life\u201d). A description of the key features of the individual <\/span>variable insurance contract is contained in the Information Folder for the product being considered. Any amount that is allocated to a <\/span><\/span>segregated fund is invested at the risk of the contract owner and may increase or decrease in value<\/span>. Past performance is no guarantee of <\/span>future performance.<\/span>
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    \u00ae Registered Trademark of The Empire Life Insurance Company<\/span>. All other trademarks are the property of their respective owners.<\/span><\/p>\n

    July 2025<\/span><\/p>\n<\/div>\n