Rasid highlighted that tariffs and fiscal policy are closely linked. “Trump really needs that revenue coming from the tariff situation to fund his One Big Beautiful Bill Act,” she says. Tariff revenues are projected to surge from US$80 billion ($102.6 billion) in 2024 to about US$600 billion, marking a structural shift from the pre-trade war baseline of roughly 3% to a new range of 15%–20%.
Slower growth, targeted opportunities
Despite trade headwinds, JPMAM’s baseline view is that the US economy will slow only modestly in the second half of 2025. Growth is expected to slip slightly below trend, but Rasid notes that “when we look at the fundamental core of the US economy, it is still one that is signalling a strong economy”. Capital expenditure and corporate investment remain healthy, although forward indicators such as developed market PMIs suggest momentum may ease.
Inflation could rise more noticeably in the coming months as tariffs feed through. While core inflation has already ticked up in categories like consumer electronics and furnishings, Rasid says a more significant increase could emerge “maybe in late summer, even September or October”, potentially prompting the Federal Reserve to wait for more data before acting. In her view, the Fed will “wait at least for two more employment reports and inflation reports” before moving, with one rate cut likely this year and the possibility of one or two more in 2026.
See also: Asian bonds gain favour as real yields rise and USD weakens: Eastspring
The US dollar, which weakened sharply in the first half, is expected to see “some sort of consolidation in terms of the weakness” in the coming months, according to Rasid. She anticipates modest further depreciation before stabilising near fair value, adding that while short-term softness could benefit non-US assets, structural supports for the currency remain intact over the medium term.
Europe and Japan are gaining investor interest. In Europe, rising defence spending — especially in Germany — is combining with improved bank profitability to create selective equity opportunities. Rasid points out that the European banking sector is benefiting from higher net interest margins after years of ultra-low rates, while defence-related names have re-rated on long-term spending commitments. Japan, meanwhile, is showing signs of a durable exit from deflation, with wage growth and core inflation trends “moving towards the right direction” and boosting domestic demand.
From an equity allocation perspective, Rasid says the US remains the “core” holding for global portfolios due to its superior profitability. Profit margins in the S&P 500 are near multi-decade highs, and earnings growth is broadening beyond the largest technology names to include infrastructure, utilities and other enablers of the AI ecosystem. “The AI story is not going to be very concentrated in just your communication services and tech,” she says, adding that the build-out of supporting infrastructure offers opportunities across sectors.
See also: 2Q earnings buoy global equities as AI capex lifts profits: Lombard Odier
‘Self-help’ in Singapore
While the US remains at the centre of most portfolios, Rasid continues to emphasise on diversification — both geographically and across styles. European aerospace and defence companies, regional banks, and high-dividend Asian equities are among the areas offering complementary returns.
Pauline Ng, head of Asean team for emerging markets and Asia Pacific equities, sees compelling opportunities in Asean, a region she describes as “unknown, unloved and mispriced” after a decade in which technology-heavy markets dominated. “If you’re looking for a TSMC, don’t look in Southeast Asia,” she says, referring to the Taiwan-based semiconductor giant. However, the bloc offers diversity, domestic reforms and sectoral stories that global investors often overlook.
Year-to-date performance within Asean has been highly uneven. Singapore’s equity market is up around 26%, driven by banks and corporates focusing on higher dividend payouts and buybacks to improve return on equity. The Philippines has gained 4%–5%, while Indonesia and Thailand are in negative territory. Vietnam, not yet in MSCI indices, has surged more than 30%.
Ng says that much of Singapore’s outperformance stems from what she calls “self-help” measures by major companies, such as paying out excess capital and being more disciplined in terms of allocating the capital to drive ROE up for the market.
She contrasted this with Thailand, where she encourages corporates to adopt similar shareholder-focused strategies. “It’s no secret Thailand is an ageing economy… that does not mean that’s the end of investment in Thailand,” she adds, pointing to the potential for banks to return excess capital more efficiently.
Thematic drivers vary widely across the region. In Malaysia, the data centre story is building momentum as hyperscale operators look beyond Singapore, which has a moratorium on new capacity. In Thailand, medical tourism remains a bright spot, attracting Middle Eastern and intra-Asean visitors with high-quality care at competitive costs. Ng noted that the shape of tourism is shifting, with medical services becoming a larger share of visitor spend.
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Indonesia, meanwhile, has lagged amid political transition, but its financial sector offers high yields of more than 8%, backed by strong capital positions. Ng sees this as an opportunity for patient investors: “All these banks should be paying out more sustainable dividends,” she says.
Meanwhile, Rasid points to opportunities linked to AI beyond the US. Capital expenditure plans from leading Asian technology companies remain robust, benefiting North Asian and Asean tech producers. In China, she sees value in both onshore and offshore equities: the former offering exposure to dividend and fiscal stimulus plays, the latter to the tech recovery as policy stances soften.
Fixed income remains an important part of the allocation mix. Rasid advocates a barbell strategy, combining high-quality corporate bonds — both investment-grade and high-yield — with developed market government bonds. She notes that high-yield corporate fundamentals are stronger than pre-Covid, with cleaner balance sheets and lower default rates.
For income-focused investors, high-dividend equities in Asia Pacific ex-Japan, alternative assets and option-overlay strategies are also worth considering. Selling covered calls, for example, can provide an additional yield stream while offering some downside offset in weaker markets.
The overarching message from both strategists is to stay invested, manage risk through diversification, and look beyond short-term volatility. Historical data show that despite intra-year drawdowns, markets deliver positive returns in most calendar years. “If your portfolios are not balanced already, it’s time to rebalance,” she says, adding that if investors have been very allocated to US equities, they do not need to unwind their investments there, but for future additional investments in the medium term, it is worth looking elsewhere.
With global growth expected to soften but remain positive, the investment case favours a US core complemented by selective allocations to Europe, Asia and Asean. Structural themes from AI adoption to defence spending are creating investable opportunities, while income generation strategies can help cushion portfolios against market swings. “Even without a big tech champion, Asean can still deliver differentiated returns for global investors who are willing to look,” says Ng.
