Global equities 2025 outlook: From Trump and Japan to weight loss drugs and AI

A new Trump Administration, mass restructuring of Japanese corporates, artificial intelligence and weight loss drugs are just some of the trends that will drive global equities in 2025, says Pendal’s CHRIS LEES

• Global mega-trends resetting investing
• Mid-caps set to benefit
• Find out about Pendal Global Select Fund
• Watch a Pendal webinar covering the outlook for global equities and emerging markets

AS THE biggest global election year in history comes to a close, a range of new opportunities – and risks – are emerging for global equities investors in 2025.

Just after the US election, Pendal Global Select fund manager Chris Lees joined a live webinar with Pendal Global Emerging Markets Opportunities fund manager Ada Chan to discuss the major trends affecting investors.

You can watch the full webinar here. 

Below are Chris Lees’s key points. Click here for Ada Chan’s insights.

The Trump effect

“Our assumption is that Trump 2.0 will be slightly different from Trump 1.0 and will probably be quicker to make some deals,” says Lees.

Mid-cap stocks are already beneficiaries.

“There are a lot of really exciting mid-cap stocks around the world, in many geographies, in many sectors, where earnings have come through the last few years but share prices haven’t done much because global markets have been obsessed with the Magnificent Seven [technology stocks],” Lees explains.

“Partly the better performance from mid-caps is a result of the Trump election, because the new Administration will be very business friendly.

“We are also seeing a better performance from the financials and cyclicals. I think that is sustainable.”

Japanese restructuring

Opportunities in Japan involve corporate restructuring, Lees says.

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“Japanese corporates are embarking on western style restructuring and seeing huge earnings growth and huge revenue growth. That’s the excitement in Japan – politics is much less the driver.

He calls it a regime change, and it was triggered by the Japanese stock exchange writing to companies telling them to restructure to get their price-to-book values above one.

“The threat is they will be de-listed [by the exchange] and no CEO wants to be delisted. It’s a powerful stick,” Lees says.

“There’s a whole generation of really, really exciting new Japanese restructuring opportunities for global investors.”

Second generation GLP-1 drugs

Lees calls the development of GLP-1 drugs, better known as weight loss drugs, a “genuine regime shift”.

“Humankind has never had these before … and when you get a regime shift you tend to overshoot.”

He says investors in Novo Nordisk and Eli Lilly, the manufacturers of first generation obesity drugs, have done well. But the side-effects of the drugs, including gastro issues, vomiting and diarrhea, are negatives. There is also too much weight loss from muscle, and not enough from fat.

“The next generation of weight loss drugs is what we are most excited about. The are 20 plus next generation anti-obesity drugs in phase one, two or three trials. Eli Lilly and Novo Nordisk have about half of them, but the others are owned by some really exciting mid-cap companies,” Lees explains.

 “They have less side effects and more of the weight loss is from fat. So that whole market will evolve.”

Artificial intelligence

On artificial intelligence, Lees says the big question is who is going to make money, apart from chip maker Nvidia?

“At the moment, the majority of profits have gone to one stock. Can we find other stocks that can use AI to become inherently more profitable for shareholders?” he asks.

“The bear case for AI is that in the history of technology, successful tech is better, faster, cheaper. But AI isn’t better, faster cheaper because …. Its three to five time more expensive to do an AI driven search than it is a regular Google search.”

“Don’t be wholeheartedly positive, because this technology currently is slower and more expensive. It’s fascinating.”

Find out more about Pendal Global Select Fund

About Chris Lees and Nudgem Richyal

Chris Lees and Nudgem Richyal are senior fund managers of Pendal Global Select Fund. The pair have been working together as investment managers for more than 20 years.

Chris has more than 32 years of investment industry experience. He joined Pendal Group’s UK-based asset manager J O Hambro Capital Management (JOHCM) in 2008 after spending 19 years at Baring Asset Management, ultimately as head of its global sector team.

Nudgem has 22 years of industry experience, joining JOHCM with Chris in 2008. He was previously an investment director with the Global Equity Group of Baring Asset Management, where he worked closely with Chris since 2001.

About Pendal Global Select Fund

Pendal Global Select Fund is a global equities portfolio with a distinctive, yet proven approach. It is a ‘quantamental’ fund combining quantitative and fundamental investing with decades of experience.

Instead of following the crowd, portfolio managers Chris Lees and Nudgem Richyal focus on “fat tail” winners in the distribution of stock returns.

These are the long-term compounders, stocks in early-stage growth or those undergoing transformation or recovery.

About Pendal

Pendal is an Australian investment manager focused on delivering superior investment returns for clients through active management.

Our experienced, long-tenured fund managers have the autonomy to offer a broad range of investment strategies with high conviction based on an investment philosophy that fosters success from a diversity of insights and investment approaches.

In 2023, Pendal became part of Perpetual Limited (ASX:PPT), bringing together two of Australia’s most respected active asset management brands to create a global leader in multi-boutique asset management.

Contact a Pendal key account manager here