Investment opportunities I’m looking at in 2025

This post was created in partnership with FSMOne. All views and opinions expressed in this article are Beansprout's objective and professional opinions. FSMOne is the B2C business division of iFAST Financial Pte Ltd ("iFAST"), the Singapore subsidiary of SGX Mainboard-listed iFAST Corporation Ltd.

2024 turned out to be a surprisingly great year for financial markets. My portfolio not only recovered from the losses of 2022 but continued to deliver solid gains this year. 

I’ll admit, I expected markets to rebound from the tough conditions of 2022 and early 2023, but I didn’t anticipate the magnitude of this recovery. 

At the start of the year, the consensus was that the Fed would start cutting interest rates and markets were optimistic about that. But there was also plenty of uncertainty throughout 2024 around US inflation, which kept me cautious. 

And let’s not forget the surprises that came along the way. 

Anyone recall the Japanese yen unwinding earlier this year?

That was a good reminder of how unpredictable markets can be. 

Then came Trump’s return to the presidency, which seemed to inject a wave of exuberance in the markets. 

US indices rallied. As of 13 December 2024, the S&P 500 is up by 26.86% YTD, the Nasdaq 100 by 29.44%, and even the STI gained a solid 17.79%.

Looking ahead to 2025, I’d like to continue positioning my portfolio for growth but manage my risks well. To do that, I’ll need to keep an eye on events shaping the economic landscape next year.

Drawing on insights from iFAST, here are some things I’m watching for in 2025. 

#1 - The hunt for yield continues as central banks cut rates

Last year, analysts predicted six rate cuts, bringing the Fed fund rate down to as low as  3.75% to 4%.

Fast forward to today, and the Fed has only cut rates three times, leaving us at 4.25% to 4.5%. 

Looking to 2025, iFAST forecasts that benchmark rates will likely stay relatively high, even if there are more cuts. While we’ve seen signs of easing inflation this year, it’s clear that the Fed isn’t willing to take big risks by slashing rates too quickly. 

What does this mean for my portfolio? 

With rates remaining elevated for longer than initially expected, the Singapore T-bill remains an attractive option for parking spare cash safely. 

Even if the 6-month T-bill yield has come off its high from 2022, its cut-off yield was 3.02% on 19 December – well above pre-pandemic levels. 

That said, I’m also looking for opportunities to earn better yields than T-bills can currently offer. 

According to iFAST, short-term investment-grade bonds remain more attractive than longer-term bonds. 

This is because short-term rates are expected to stay higher than long-term rates. While the US Treasury yield curve is normalising, the rate difference still favours shorter durations. 

As reported by iFAST, short-duration corporate bonds offer above 4% yields. This aligns with my goals for the next 1 to 3 years, which include saving for a downpayment on a future home. 

#2 - More potential upside to US stocks

The US market also continues to grow, driven by some of the largest and most influential companies in the world. 

iFAST believes that Big Tech and other major sectors like semiconductors will drive growth in 2025.

Big Tech, in particular, had a great year thanks to the AI boom. 

iFAST is particularly bullish on this sector, which is positioned to capture many parts of the AI value chain from software and hardware to cloud infrastructure, in the US and internationally.

The S&P 500 is projected to see earnings grow by 10.8% YoY in 2025, according to iFAST. 

This signals that there may still be room for further potential upside in US stocks. 

I already have some exposure to US stocks in my portfolio, and I plan to build on that heading into the new year. 

My approach is to dollar-cost average, adding to my positions every month. It’s a strategy that has worked well for me so far, helping me ride the highs and weather the lows of the market. 

#3 - What may surprise us in 2025? 

China has had its fair share of economic challenges in recent years. We’ve seen low inflation and weak domestic consumer demand in China in 2024.

More broadly, China’s economy is also plagued by lingering structural challenges including the national government's crackdown on the private sector and policies favouring state-owned enterprises.   

These challenges have weighed on China’s growth in the past couple of years. 

But despite the headwinds, it is still the world’s second-largest economy, one that we can’t ignore. 

The Chinese government’s recent stimulus measure suggests a commitment to reviving the economy. More stimulus could be introduced in the near term to support the economy. 

If these efforts succeed, they could lift investor sentiment and generate positive momentum in the Chinese markets. 

Looking ahead to 2025, iFAST projects earnings growth of 14.3% year-on-year for Chinese stocks, with PE ratios still below their 2023 levels at 9.45.

This paints a picture of potential value for investors seeking short-term or tactical opportunities. 

Personally, I’ll be monitoring Chinese stocks closely, but I’m being selective given the risks involved. 

For now, I see this as a market that’s worth watching rather than diving into headfirst.

Beyond China, broader uncertainty in the global economy is a growing concern. 

A potential US-China trade war under Trump’s administration could lead to retaliatory tariffs and increased geopolitical tensions. 

This would put pressure on global growth and lead to more volatility in the markets, adding another layer of complexity to our investments in 2025. 

For me, I’ll be monitoring my risks regularly in the coming year. Diversification and dollar-cost averaging are still my go-to strategies to navigate these challenges. 

What would Beansprout do?

Heading into 2025, reading the insights shared by iFAST has given me ideas on how to think about my portfolio. 

The investment landscape often feels like a moving puzzle, so having expert perspectives will help me make more informed decisions. 

To deepen our understanding of next year’s outlook, we’re also looking forward to attending the annual FSM Invest Expo happening on 18 January 2025 at Suntec Convention Centre. This premier event brings together renowned fund managers from around the world, offering presentations and dedicated booths.

It's a perfect and unique opportunity to gain expert insights into sectors that interest me – and the best part? Admission is free.

Additionally, attendees can look forward to goodies bags and attractive lucky draw prizes worth over S$10,000.

Start your 2025 investing journey with confidence by registering for FSMOne Invest Expo 2025 here.

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