Q1: Private banks in Asia have faced a number of challenges in 2024, from uncertainty around interest rate cuts in the US to volatile markets and geopolitical tensions. Considering this background, how did you safeguard AUM and revenue streams in 2024, while also attracting net new assets? What will your strategy be in 2025?

Bank J. Safra Sarasin is a private bank with over 180 years of history, and we pride ourselves on being a truly sustainable bank that has the ability to weather challenging market environments while remaining solidly on track. As of the end of 2023, our Group CET1 Capital stood at CHF 5.7 billion, with a CET1 ratio of 47.0%, which was well above regulatory requirements. Our strong capital base and high reserves have contributed to our resilience. The fact that a lot of our clients have been banking with Bank J. Safra Sarasin for generations signifies their trust in us.

2024 has been a remarkable year of growth for Bank J. Safra Sarasin in Asia. We’ve continued hiring in the region to strengthen our team and achieved exceptional growth in both revenue and net profit in 2024 to date. Looking ahead, our focus remains on strengthening the long-term partnerships we have been cultivating with our clients. We remain committed to growing our business in Asia and look forward to bringing a variety of shared investment opportunities for our clients.

Q2: How are you advising clients in terms of investment opportunities in 2025? Which markets and asset classes will provide the best opportunities? And how can clients balance leveraging these opportunities while managing risks to their portfolios?

We finish 2024 with stronger economic growth, more balanced labour markets and lower inflationary pressure than we and financial markets had imagined a year ago. The favourable economic dynamics, particularly in the US, provide the ground for our constructive baseline scenario for the global economy and financial markets for the next two years.

Equities should deliver decent returns in such an environment. We have end-year index targets of 6,300 and 6,800 for the S&P 500 for 2025 and 2026, respectively. We expect equity index returns until end-2025 to range from 5%-9% and a cumulative 11%-19% until end-2026. Fixed Income should benefit from a high carry. While yields should remain elevated, they should not rise meaningfully from current levels. President-elect Trump’s policy mix argues for a stronger dollar, in particular in the first half of 2025.

For global equities, the setup for 2025 looks like one in which value could outperform for the first time since 2022 and recover some of the ground it has lost in the past two years. An uptick in rates, as we project in our base case, would support value. We also think that financials would be a key beneficiary of a Trump administration, given the triple benefit from higher rates, fewer restrictions on M&A deals and the potential abandonment of the Basel III endgame capital requirements. Another sector which we have upgraded to most preferred is healthcare, the second largest sector in the global value index. Contrary to financials, it has been the weakest global sector over the past three months. With no apparent political headwinds, a stronger US dollar should provide support for the global healthcare sector. At the same time, a strengthening cycle does not pose a risk for health care’s relative performance, in our view.

In the fixed income space, we forecast a shallower rate cut trajectory for the Federal Reserve than before, with a total of 75bp of cuts between now and the end of 2025. We maintain our neutral stance on credit for both investment grade and high yield, given the valuations are not compelling and a trade war, which is a clear downside risk to our baseline scenario, would hurt the economy and lead to higher default rates. We continue to prefer intermediate maturities (five to ten years).

Q3: China’s announcement in 2024 of a series of monetary and fiscal stimulus measures has helped re-energise the world’s second-largest economy, bringing optimism and momentum to the market. What opportunities has this created for your bank? How would you advise clients when it comes to investing in China?

We certainly welcome China’s policy pivot to shore up its domestic demand. The good news is that recent data suggests the economy is beginning to respond positively to these early measures. While we anticipate that 2025 may present challenges, such as potentially higher import tariffs from the US and ongoing adjustments in the housing market, we believe that these obstacles also create opportunities for investors.

Chinese policymakers are likely to implement further stimulus to bolster growth, and we expect this to lead to favourable conditions for certain sectors. The upside risks associated with a stable trade environment could be significant, particularly in areas like technology and green energy. We are closely monitoring potential shifts in market sentiment and recommend that clients adopt a strategic approach, focusing on sectors that stand to benefit from both domestic growth initiatives and any easing of trade tensions.