Fidelity International: Expects sustainable growth in US stocks by 2025, with a focus on corporate profit trends.

Fidelity International Investment released a report stating that looking ahead to 2025, global market uncertainties will continue to exist. From the perspective of diversified asset allocation, Fidelity remains optimistic about investing in stocks but emphasizes monitoring corporate profit trends, as they are an important driver of returns. As for fixed income, the impact of the upcoming Republican administration in the United States and expectations of higher inflation have led to an increase in US Treasury bond yields. This reflects the potential for considerable returns and risk diversification from fixed income investments. However, it is recommended to strategically deploy investments based on the duration of the bonds, as bond yields will continue to fluctuate due to various factors such as growth, inflation, and policy expectations. In terms of regional allocation, US stocks have recorded strong gains this year. With expectations of further expansionary fiscal policies, potential corporate tax cuts, and deregulation, it is anticipated that the momentum of US stocks can be sustained. Strong corporate profit expectations are predicted to spread from the technology sector to other industries, narrowing the gap between the two. Considering that the US economy's momentum is nearing saturation, additional stimulus measures are expected to further increase inflation more than economic growth. Economic growth expectations in Europe are weaker compared to the US, with the ongoing political instability in France and Germany, along with market concerns about the sustainability of fiscal policies, leading to lagging markets in the region. However, considering that most negative factors have already been reflected, investors should pay attention to whether local central banks and governments will increase support policies, as well as the developments in the political situation between Russia and Ukraine, to explore local investment opportunities. In Asian stock markets, the Indian stock market is expected to face less impact from the US-China trade tensions. Taiwan and South Korea's stock markets benefit from their close relationship with the global technology cycle, but investors need to be aware of recent political instability and the possibility of the technology cycle reaching its peak, which may affect market performance. China's shift in policy towards stabilizing the real estate market and the stock market indicates support for growth and a focus on local demand, which will be favorable for market sentiment. In Japan, substantial wage growth is expected to continue to drive consumption, but the ongoing risk of US tariffs and their impact on external demand remain uncertain. Japanese Prime Minister Shizo Abe's support for companies to increase wages in the spring and raise minimum wages, along with the Bank of Japan having more conditions to raise interest rates again, indicates that a stronger yen and higher interest rates may pose headwinds to corporate profits in 2025. It is important to be aware of these related risks.