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2025...brought to you by the letter "T"

28 January 2025 / Published in Your Money
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Our line-up of market and investment experts share their picks for the year ahead, focusing on BlackRock's mega-force themes and what they'll be closely watching in 2025.

Chris Tennent-Brown, ASB Senior Economist

The year ahead

2025 is marked by US President Trump's tariff policy. As an exporting nation, New Zealand relies on tourism and global trade. The big question is how Trump's tariffs will impact global trade. On the positive side, lower interest rates and a weaker New Zealand dollar could stimulate households and exporters. ASB predicts a 50 basis point cut in the Official Cash Rate in February to help the economy which is still in need of support.  Inflation needs to get to and remain at around 2% over the years ahead. 

Click here to read ASB's latest economic forecast. 

Mega-force of note

Demographic change is crucial for New Zealand. With an aging population and New Zealanders' love for overseas experiences, migration is key to filling skilled shortages. How migration trends affect the labour market in the year ahead will provide an indication of how well we can solve our demographic challenges over the next growth cycle. 

What I'll be watching

I'm upbeat on dairy, but I'll be keeping track of my forecasts on forestry, red meat, and migration. I'm cautious on the outlook for these sectors but hope to be wrong. Migration is key, and I hope the lower New Zealand dollar and global growth prospects aren't derailed by a tariff war. I'll monitor prices and volumes for what I hope is a broadening strength story in exports.

Final thought

In five years, houses will likely be more expensive, the share market will have gone up, and interest rates may not be as low. My advice is to act now based on research, rather than drifting along and regretting inaction later.

Victoria Harris, Co-founder of The Curve

The year ahead

Inflation is a major concern. The pandemic and cost-of-living crisis have created global exhaustion. The US President's policies on climate change and trade, along with wars and rising oil prices, all pose a high risk to global inflation. This could mean another 12 months of uncertainty.

Mega-force of note

A demographic change that is underway will see $84 trillion in wealth transferred to women over the next five years. This generational shift is driven by women being better educated and in higher-earning senior leadership roles as well as outliving men and accumulating wealth.  Women have different investing goals, and this presents opportunities for philanthropic and climate industries, which women tend to favour. 

What I'll be watching

I'm interested in the protectionist side of the Trump presidency, particularly its impact on the US-China relationship and what that means for companies like Apple.

Diversification in your investments is key to managing uncertainty. 

Final thought

With US stock market and Bitcoin's stellar performance in 2024 got a lot of people excited and we do not know if this will continue into 2025. It's best to be diversified and have a plan and avoid 'FOMO' and stay educated. Life doesn't always go to plan, so the more you can plan around that, the better.

Will Porter, Investment Strategist, BlackRock

The year ahead

Tariffs, tax cuts, and deregulation are key themes of the Trump administration that could have a big impact on 2025. Tariffs and corporate and income tax cuts depending on their form, have the potential to create inflationary pressures in the United States. Deregulation, including the potential winding back of the Inflation Reduction Act and banking sector deregulation, could fuel growth. However, these measures, coupled with a firm stance on immigration, are seen as inflationary by BlackRock. Alongside broader mega forces and ongoing budget deficits, expect to see higher rates than what we've been used to in the post-global financial crisis era.

Mega-force of note

Digitisation and decarbonisation are impactful in the short term. BlackRock Investment Institute Transition Scenario estimates $USD3.5 trillion in spending per year this decade to meet growing energy demands including those linked to the adoption of Artificial Intelligence (AI) and its buildout via data centres. The investment required for the AI and low-carbon transition are potentially on par with the Industrial Revolution. 

What I'll be watching

BlackRock remains positive on US equities, and we still think there's enough growth and positive sentiment to make them a reasonably attractive investment. However, higher rates could impact valuations, so we'll monitor this closely. 

Final thought

It's important to have a plan for your investments and stick to it. We all have behavioural biases that take control when things get volatile or uncertain, so it's important to be aware of these and maintain an ongoing relationship with financial advisors to help you achieve your financial goals.

With all these significant factors likely to influence the year ahead, we'll leave you with a takeaway thought from ASB's Nigel Grant, Head of Wealth Product and Host of the ASB Investment Podcast - know what you can control, ignore the noise and trust the plan you have in place - with either your advisor or through use of our tools like ASB KiwiSaver Scheme's digital advice. 

If you're interested in keeping up to date on investor insights and latest markets updates, you can find more on our ASB Investor Hub.  

Important Information: This material has been created with the co-operation of BlackRock Investment Management (Australia) Limited (BIMAL) ABN 13 006 165 975, AFSL 230 523 on 8th January 2025. Comments made by BIMAL employees here represent BIMAL's views only. This material provides general advice only and does not take into account your individual objectives, financial situation, needs or circumstances. Before making any investment decision, you should obtain financial advice tailored to you having regard to your individual objectives, financial situation, needs and circumstances. Refer to BIMAL's Financial Services Guide on its website for more information. This material is not a financial product recommendation or an offer or solicitation with respect to the purchase or sale of any financial product in any jurisdiction.

This material provides general information only. This material is not a financial product recommendation or an offer or solicitation with respect to the purchase or sale of any financial product in any jurisdiction.

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