Since Donald Trump’s return to the Oval Office began (Trump 2.0), equity investors have quickly learned the hard way that market volatility is cranking higher.
On-again, off-again tariffs targeting Canada, Europe, Mexico and China have whipsawed financial markets as investors wrestle with the implications of rising policy uncertainty and the impact on the global economy. The problem, however, is that the unfolding narrative could, and probably will, change tomorrow.
Such uncertainties have permeated into equity markets as seen by the recent pullback in US stocks. Some commentators are even claiming that this could be the end of a decade-long US bull market.
Whether that is true remains to be seen. However, it is crucial to acknowledge that the US economy boasts numerous advantages, many of which have not been lost. These include strong access to capital, plentiful energy supplies and a technology sector that consistently drives innovation.
Going global
Meanwhile, the case for a flexible global portfolio has gotten stronger. That is because investing globally allows investors to capture promising opportunities both in and outside of the US.
India has become the most populous country and looks set to lead global workforce growth over the next 20 years. Moreover, Japan could be entering a new earnings growth cycle thanks to new shareholder-friendly policies.
Even in Europe, where the economy has been weak, there are companies essential to the major investment themes we’ve seen over the past decade. Chip equipment-maker ASML is in that category, and drugmaker Novo Nordisk.
The Capital Group New Perspective strategy, which recently came out top in the Asia Asset Management 2025 Best of the Best Awards’ Global Equity category (30 years), is one such portfolio that was designed to benefit from these intersections of change.
Focusing on multinational firms (MNCs) is a key reason why New Perspective is able to remain at the forefront of change. These companies are often creating, driving and shaping the trends of the future. MNCs are also better equipped to deal with the volatility of an increasingly complex world due to their flexibility, resilience and world-class management teams.
This can be seen in the fact that many MNCs are expanding their manufacturing as well as R&D bases in the US – a move that can help manage the threat of tariffs, which are a key source of uncertainty under Trump 2.0. Examples include:
- Taiwan Semiconductor Manufacturing Company (TSMC): The Taiwan-domiciled manufacturer of the most advanced semiconductors expects to complete the construction of a new chip factory in Arizona in early 2025. This factory will operate TSMC’s leading-edge semiconductor process technology. The company has also announced it will build two more chip factories in the US, which will be operational by 2028 and 2030.
- Schneider Electric: a French-domiciled provider of electrification equipment with strong exposure to data centres and electricity grids — two critical areas of infrastructure. The company has already invested half a billion US dollars to enhance its US manufacturing operations since 2020, and currently 80% of its US sales are sourced locally.
Transformational shifts
While it is easy to be distracted by the policy uncertainties originating from the US, investors should also recognise that there are several transformational shifts – such as artificial intelligence (AI), health innovation, and an industrial resurgence – that could offer more diverse investment opportunities in the coming years.
In each of the transformational shifts we have identified, there are examples of global companies that hold strong market positions and could benefit from the tailwinds of change.
- Disruptive force of AI
Given the multifaceted nature of the AI ecosystem, there is no single “correct” way to map investable opportunities. We aim to distinguish between near-term and longer-term opportunities.
Five areas we are focusing on include: computation (semiconductors, or the “brains” of AI), infrastructure (cloud service providers, data centres and networks, which provide the “plumbing”), AI model developers, software applications and, finally, the real-life and end-industry beneficiaries.In AI, scale is an advantage. Large tech companies already have proprietary data, substantial capital, and some of the brightest engineering talent. Some also own the expensive cloud computing infrastructure necessary for training AI models. In addition, they have huge user bases to which they can sell AI products and services. While some AI startups may find success over time, the starting point for incumbents is very strong. - A new wave of health care innovation
The next era in pharmaceutical innovation could be transformative for health care. Breakthroughs in RNA interference (RNAi), gene therapy and gene editing are leading to highly targeted interventions to tackle a wide range of genetic disorders.
These novel treatments could address major, but largely untreated, illnesses worldwide such as cancer, obesity and cognitive impairment.
While some biotech companies are small and specialised, large pharmaceutical companies have become more disciplined in focusing on their area of expertise. Some of these large companies have been the innovators in GLP-1 treatments – diabetes and obesity drugs – and gained a first-mover advantage. - Industrial renaissance
For the past 15 years, investors have largely ignored old-economy industrial businesses that make physical things. However, signs of an “industrial renaissance” are emerging, driven by multi-year trends such as energy security, the buildout of data centres, rising defence spending and the reconfiguration of global supply chains.
Essentially, old-economy manufacturers could become critical enablers of our future economy. For example, heavy-duty construction equipment is essential in modernising the electricity grid and powering data centre growth. The large manufacturers of this machinery generally have dominant industry positions and could capture gains from multiple years of strong demand.
In many ways, MNCs can be well positioned to navigate the transformational shifts we have identified. They often have strong management teams that can overcome complex problems, have access to resources, and respond quickly to competition. If the first few months of Trump 2.0 are anything to go by, these traits are likely to be critical.
FOR PROFESSIONAL INVESTORS ONLY
Risk factors you should consider before investing:
- This material is not intended to provide investment advice or be considered a personal recommendation.
- The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.
- Past results are not a guarantee of future results.
- If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
- Some portfolios may invest in financial derivative instruments for investment purposes, hedging and/or efficient portfolio management.
- Depending on the strategy, risks may be associated with investing in fixed income, derivatives, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.
Statements attributed to an individual represent the opinions of that individual as of the date published and may not necessarily reflect the view of Capital Group or its affiliates. This communication is intended for the internal and confidential use of the recipient and not for onward transmission to any other third party. This communication is of a general nature, and not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities. All information is as at the date indicated and attributed to Capital Group unless otherwise stated. While Capital Group uses reasonable efforts to obtain information from third-party sources that it believes to be accurate, this cannot be guaranteed.
In Hong Kong, this communication has been prepared by Capital International, Inc. (Cllnc), a member of Capital Group, a company incorporated in California, United States of America. The liability of members is limited. This advertisement or publication has not been reviewed by the Securities & Futures Commission of Hong Kong.
In Singapore, this communication has been prepared by Capital Group Investment Management Pte. Ltd. (CGIMPL), a member of Capital Group, a company incorporated in Singapore. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. Neither has it been reviewed by any other regulator.
All Capital Group trademarks are owned by The Capital Group Companies, Inc. or an affiliated company. All other company names mentioned are the property of their respective companies.
© 2025 Capital Group. All rights reserved.
