Weekly Report 50/2025

Forecasts vary widely

Trading volume on the capital markets declines in December. Most investors have already positioned themselves for the new year or will do so once there is clarity about available liquidity again after January 1. It is also interesting to note how widely forecasts regarding various investment opportunities vary. One thing is certain: in Switzerland, with an inflation rate of 0%, it will be virtually impossible to achieve any lasting returns on bank deposits. There is also widespread agreement that we have considerable growth potential in Europe. Further reforms are needed. Even in Brussels, reducing bureaucracy has become the order of the day in order to strengthen competitiveness.

Domestic economic growth is particularly important, as exports have become less significant. For the first time in its economic history, Germany has imported more from China than it has exported to the country. It is interesting to note in this context that German companies want to become more “Chinese.” Supply chains are being relocated and further investments are planned in order to grow in China with local forces and keep up with Chinese competitors. This is because three out of five German companies surveyed assume that their Chinese competitors will become innovation leaders in the next five years.

Some forecasters are concerned about a price bubble that is said to have arisen in connection with artificial intelligence (AI). Others, on the other hand, believe that we are only at the beginning of a great surge in productivity and growth in the real economy. Investments in infrastructure companies are associated with real economic benefits. Every data center ultimately needs a power supply, i.e., stable power grids with HVDC technology, large transformers, and reliable energy sources. According to estimates, up to 20% of the accelerated energy demand will be required by AI data centers by 2030. Depending on the energy source and location, it is not chips but energy that is the real limiting factor.

Some believe that the phase of exceptional performance by US equities is gradually coming to an end. Indeed, it is difficult to imagine that the weighting of US equities in the MSCI World Index will rise from its current level of 71% to 80%. History has shown time and again that weightings change, both on the capital markets and in the real economy. The market-value-weighted global equity index is more heavily weighted toward IT companies than ever before.

However, anyone who believes that a healthy diversification of the global equity index can be achieved, for example, by allocating to emerging markets (e.g., MSCI Emerging Markets) is mistaken. In Taiwan, semiconductor manufacturer TSMC accounts for more than 30% of the index; in South Korea, Samsung Electronics and SK Hynix generate 43% of the index; and in China, key IT companies such as Tencent and Alibaba are weighted at 22%. Should an IT bubble burst, this would affect these emerging markets just as much as those of the industrialized countries. That is why we take a fundamentally different approach to diversification and ensure a much broader spread across sectors.