Future-proofing portfolios in an age of disruption

2025 has been a year of sharp disruption and strikingly strong markets.

- Tan Min Lan

Customers shopping for Halloween candy at a Target store on Oct 30 in California. If inflation resurges, a constrained US Federal Reserve may keep rates from falling. If so, gold and commodities offer valuable hedges. PHOTO: AFP

(AFP)

The artificial intelligence (AI) boom propelled equities to repeated all-time highs, fuelled by policy easing, corporate “self-help” strategies and reforms across major economies. Remarkably, gold — typically seen as a safe haven — has been the best-performing major asset, rising nearly 60 per cent in a year dominated by secular growth narratives.

This unusual mix of risk-on sentiment and gold leadership is a reminder that beneath the resilience, the global environment remains unsettled. Geopolitics has grown more complex as countries prioritise strategic autonomy and economic security. Supply chains are being reconfigured as companies balance resilience with cost efficiency.

Meanwhile, China still grapples with deflationary pressures, soft domestic demand and intense competition, even as the authorities work to counter “involution”, which refers to excess capacity and competition. More recently, the latest equity pullback has prompted questions over whether the AI trade has peaked.

We suggest this strategy: stay pro-growth, avoid over-concentration and ensure portfolios are diversified with a robust liquidity strategy.

We remain constructive on global equities. The world economy is resilient, and the Fed remains in an easing cycle. A softening labour market should allow for two more 25 basis point (bp) cuts by the end of the first quarter of 2026. We expect the MSCI All Country World Index to rise by mid-teens per cent by end-2026. For the S&P 500, earnings should grow around 10 per cent, with the index reaching 7,700 by year end - about 16 per cent above current levels.