Schroders Investment: Asia deeply integrates into the global manufacturing value chain, making it difficult for funds to flow back to the United States

According to the Zhitong Finance APP, Schroders Investment has published its outlook for the global financial markets in the second half of 2025, analyzing the macroeconomic situation and the investment prospects of various asset classes, and pointing out the profound impact of potential tariff policies and changes in consumer behavior on the market. Keiko Kondo, Head of Multi-Asset Investment for Asia at Schroders Investment, stated that investors are increasingly exploring investment opportunities in Asia, leading to better performance of Asian stocks compared to the United States from the beginning of this year to date. Although the uncertainty surrounding tariffs may bring some volatility to the financial markets, Asia has deeply integrated into the global manufacturing value chain, indicating that capital repatriation to the United States faces certain difficulties. A weaker dollar is also beneficial for Asian stocks and local currency-denominated bonds in the region.

She pointed out that U.S. inflation is gradually declining, raising concerns about the potential long-term impact of tariffs on inflation. Although the job market remains resilient and hiring activity continues to be active, Schroders Investment's analysis suggests that the market may be overly optimistic about the Federal Reserve's dovish stance. Meanwhile, global fiscal policies are shifting towards expansion, with increased defense spending outside the United States and policy changes like the Inflation Reduction Act (OBBBA), reflecting that investors need to closely monitor macroeconomic trends. In the Eurozone, although inflation has fallen to the 2% target, the economic growth forecast for the region in 2025 continues to be revised downward.

Schroders Investment indicated that as the financial markets respond to the unknown possibilities of tariffs, the potential threat of a new round of tariffs may bring stagflation pressures. Although consumers have borne these costs so far, overall consumer sentiment is becoming more cautious. Despite American households still having the capacity to take on more loans, leading economic indicators such as the Institute for Supply Management (ISM) show a slowdown in discretionary spending. While inflation is gradually declining and the job market remains stable in several regions, the global medium-term economic outlook remains mixed.

Given that the risk of an economic recession in the United States in the short term remains low, Schroders Investment maintains a positive outlook on the overall stock market. The company tends to broadly allocate across stock markets in different regions, with a focus on the financial sectors in the U.S. and Europe. Keiko Kondo stated that even though fluctuations in trade policies may bring reputational risks, trends in domestic demand, stable corporate earnings, and a favorable interest rate environment support the company's investment deployment.

In terms of fixed income, Schroders Investment holds a neutral stance on the overall duration of bonds. Although the market generally expects the Federal Reserve to start cutting interest rates in 2025, fiscal deficits and supply pressures are pushing up long-term bond yields, requiring bond investors to make more cautious trade-offs between inflation and growth risks. Schroders Investment also maintains a neutral view on the credit market; although current valuations are high, the technical fundamentals remain robust, and U.S. credit continues to be favored by overseas investors.

Among commodities, Schroders Investment continues to be optimistic about gold performance, believing that its role as a traditional safe-haven asset against inflation remains attractive, with demand for gold expected to remain strong amid continued accumulation by central banks.

Keiko Kondo noted that looking ahead, both policy and economic fundamentals continue to release multiple bullish signals, and the overall outlook for the current financial market remains unclear. In such an environment, as an active investor, Schroders Investment will continue to maintain prudence and flexibility, striving to capture resilient and potentially rewarding investment opportunities amid volatility