The optimism that characterised the start of the year has been replaced by widespread operational uncertainty as executives – from Singapore to San Francisco – navigate unpredictable policy changes and ongoing supply chain disruptions. This environment has prompted many companies to withdraw forward-looking statements, narrow their guidance ranges, or append new disclaimers to earnings considering persistent macroeconomic volatility.
In today’s investment environment, it is crucial to balance a more defensive stance with selective growth opportunities that have been unjustly discounted. On-the-ground perspectives prove indispensable for staying ahead of rapidly unfolding developments. At the height of Trump’s policy announcements, Alphinity met with more than 250 companies in five countries, including the US, to gain first-hand insights and identify emerging themes.
Here's five emerging global opportunities that need to be on every investor’s radar.
Caution prevails in Asia
Consumers are exercising caution in China, and when it comes to luxury spending by consumers, it is a mixed bag. Aspirational luxury is declining, ultra-luxury is stable, and fashion and leather goods are outperforming jewellery and watches. While there are some signs of stabilisation - improvements in mall traffic, top-tier city housing prices, and reduced property inventory – as an investor in the luxury sector it pays to be selective. Alphinity’s top luxury pick is Richemont, given the strong pricing power of its iconic brands such as Cartier and Van Cleef & Arpels.
In Singapore, it is a good news story for the financial services sector. Major banks are benefiting from strong wealth management inflows - a clear sign of a flight to quality amid global uncertainty. The prevailing sentiment among corporates is one of cautious optimism, reflecting both confidence in current conditions and awareness of potential external risks.
India presents a compelling long-term growth story, as long as investors take a risk-on approach. Most notably, India is a significant beneficiary of global supply chain realignment, as companies diversify manufacturing away from China in response to escalating tariffs and geopolitical uncertainties. For instance, in the year ending March 2025, Apple assembled $22 billion worth of iPhones in India - a 60 per cent year-over-year increase. This now represents 20 per cent of global iPhone output, with plans to further expand production in the near-term.
A watchful eye on EU financials
Post US election optimism for deregulation and tax cuts initially fuelled a global banking rally at the end of 2024, buoyed by robust deal pipelines and corporate engagement. However, stagflation fears and plunging consumer confidence reversed sentiment by mid-February, freezing corporate activity.
Yet, Germany's €1 trillion defence and infrastructure package represent a structural break from decades of austerity. A potential growth tailwind for Eurozone banks, including Spanish lenders like CaixaBank.
Spain's economy is already outpacing EU peers with 2.5 per cent+ GDP growth likely, and we expect that CaixaBank will be a key beneficiary given its market-leading positions in mortgages, payroll services, and wealth management—sectors poised to compound gains from digital transformation and demographic tailwinds. However, the spectre of U.S. tariffs on EU goods looms large, potentially offsetting 20-30 per cent of Germany's stimulus benefits and introducing cross-sector vulnerabilities.
Resilience in US industrials
US industrials remain on a path toward gradual, measured recovery, rather than a rapid resurgence. Caution prevails, reflecting uncertainties about inflation, tariffs, political instability, and the Chinese economic landscape.
Two key themes stand out in industrials: tariffs and a short-cycle manufacturing recovery. Companies are preparing for tariff-related cost increases, with some already passing on surcharges and viewing tariffs as an opportunity to raise prices, which likely drives inflationary pressures. A fragile short-cycle recovery was noted despite scepticism regarding the underlying causes, with inventory buildup ahead of tariffs largely dismissed by management teams.
Recent market weakness is starting to reveal exciting opportunities at more reasonable valuations. Amid these conditions, Alphinity remains focused on defensive industrial names, such as Waste Connections, but with a watchful eye on attractive opportunities.
US consumers not in the mood
The mood has shifted in US Consumer – from reassured to restrained. Companies are generally reluctant to provide detail on potential tariff impacts given the changing external goalposts and messaging from the government. While consumer confidence has plummeted to 2022 lows, spending has been more resilient, but often more value-driven with consumers seeking the best bang for their buck and being selective about where to splurge or cut back.
In response, we have reduced our consumer facing holdings, such as Chipotle and Sherwin Williams. However, Alphinity has added to Costco given its relatively defensive growth profile underpinned by a loyal membership base. We also added a new position in our Sustainable Fund to Sprouts Farmers’ Market, a specialty grocer that we believe should benefit from near term consumer preferences for food at home and structural tailwinds for healthy foods.
Enthusiasm high for AI
There was a striking disconnect between the upbeat tone of tech meetings and the turbulence sweeping through equity markets. Enthusiasm around AI remains robust as functionality pushes deeper into business models, unlocking both revenue opportunities and operational efficiencies. “Agentic AI” is the next step in AI evolution where autonomous systems are created that can make decisions and execute complex, multi-step tasks with minimal human oversight.
In addition to AI advancements, three broader themes are emerging in the tech sector. Firstly, uncertainty around tariffs and trade policy is causing companies to delay investment decisions, risking reduced capital spending until clearer guidance emerges. Additionally, the recent breakthrough from China AI company DeepSeek, coupled with continued semiconductor advances from Huawei, have prompted the US administration to deploy new policy restrictions to stay ahead in the AI race. These responses wash through companies like Nvidia but also more broadly across the semiconductor supply chain. Finally, the dominance of the “Mag 7” tech giants is now weakening, due to both policy changes and technological shifts that are increasing competition.
Reflecting these shifts, Alphinity has steadily reduced our exposure to the Mag 7 and taken some profits in other AI capex exposed plays, such as Cadence Design Systems and Nvidia. The capital has been reallocated towards AI software beneficiaries, such as ServiceNow. We have also established a position in Chinese champion Tencent, where growth is rebounding on the back of a revitalised gaming pipeline, surging advertising on WeChat Video Accounts, and expanding opportunities in fintech and cloud. TSMC and Netflix also remain favoured holdings given the relative resilience of the business models.
Our extensive global research travels have proven essential in navigating today’s rapidly shifting landscape, allowing us to gain direct, actionable insights from management teams grappling with unprecedented uncertainty. As policy volatility and trade tensions reshape corporate strategies and outlooks, the value of certainty has never been higher for leaders making critical decisions. By grounding portfolio positioning in first-hand observations, investors are better equipped to follow new earnings leadership and remain agile and well-informed as new challenges and opportunities emerge.
Elfreda Jonker, portfolio manager and investment specialist, Alphinity
