Despite the challenges in 2024, most Asian asset classes have still seen growth thanks to strong corporate earnings, the Fed's rate cuts, and China's fiscal stimulus measures announced at the end of September. Looking ahead to 2025, Schroders global remains positive on Asia. Over the past 5 to 7 years, many companies have diversified their supply chains due to trade tariffs and should now be better equipped to deal with market conditions. Schroders global still prefers local Asian companies. For exporters, Schroders global favors those with stronger pricing power, whether through their competitive advantages (such as strong intellectual property, better technology) or the lack of US alternatives. Schroders global also maintains a positive view on the Asian credit markets, based on the continued demand from investors for attractive total returns, moderate supply, and stable to improving credit fundamentals. Schroders global believes that the US economy and interest rate policies, as well as Asian corporate earnings, will continue to dominate the development of the Asian investment markets in 2025, and has proposed three key themes as a result. Focus on local economies in Asia Strong demand from consumers in various Asian countries has reduced reliance on global markets and mitigated the potential impact of US import tariffs. Countries like India, Indonesia, Malaysia, and Thailand have favorable population structures to support local consumption. At the same time, Singapore's Real Estate Investment Trusts (REITs) are attractive for investors targeting income and growth, as the resilience of the local economy can drive sustained demand for real estate, further enhancing rental growth and property appreciation. On the other hand, banks in Taiwan and Korea also offer attractive dividend yields and benefit from strong trade relationships with major economies such as mainland China, the US, and Japan. These banks can also leverage trends in the Asian economy and investment flows. World-class leaders in the digital era Many companies in Asia are market leaders and can provide resilient profit growth. For example, Taiwan's semiconductor industry is a major beneficiary of the rise of artificial intelligence (AI) applications. Ongoing research and development investments enable Taiwanese semiconductor companies to maintain competitive advantages and adapt to changes in the market environment. Global exporters of electric vehicle batteries and machinery are important drivers of technological progress and economic growth. Beneficiaries of rate cuts by industry sector It is expected that the Fed will further cut rates to address inflation risks, albeit at a slower pace. Lower rates can stimulate consumer spending on non-essential goods and services (such as retail, entertainment, and tourism). Utilities are also expected to benefit from rate cuts, as the industry is capital-intensive and often relies on debt financing. Technology companies typically invest heavily in R&D and capital projects, so rate cuts can help reduce their financing costs and stimulate innovation. Schroders global will continue to closely monitor the developments in the region's investment markets and policies. More importantly, the effects of Trump's policies may take some time to manifest, and Schroders global will remain flexible in responding to the situation accordingly.