Welcome to 2025, a year that will be shaped by macro thematic events that were put in place at the end of 2024.

Why we need to prioritise thematic analysis is that if we look at 2023 and 2024 indices and FX markets that were tied to the thematics of those two years outperformed peers and similar tools. Considering the S&P 500 returned a whopping 25 percent in 2024, starting the new year around the event that will shape the trading world is prudent.

So what will be the big thematics of 2025?

Here are the five themes shaping the year ahead, each refined to align with evolving market dynamics:

 

1. The nationalisation of globalism

Tricky title yes, but we are going to see a return to nationalistic policies from all walks of government. This theme is likely to make a strong return in 2025 after pausing from about mid 2023.

It will be driven by shifting global trade particularly the US and China and policy priorities of populist governments that are popping up all over the world. 

The push pull of nationalism versus globalism has rapidly swung back to nationalism since COVID. Policymakers are consistently banging the drum that reducing reliance on globalised supply chains in favour of localised production and economic security. 

Just take a look at the policy ‘Future made in Australia’. This is a policy that is picking winners directly targeting manufacturing and a technology space that is already saturated with global supply. The question we as traders and investors have to ask is will national policy supporting inefficient industry win out over global supply into the future? Theory would suggest not investment however follows the money and governments are piling money in. Again that’s not to say it’s right, it’s just the flow.

With the return of a Trump administration to the White House not only is nationalistic policies going to be front and centre for investment tariffs and trade impacts will also be a major theme for 2025 and beyond. The playbook here is to review Trump 1.0 and look at the impacts on trade from 2017 to 2020. More on that below.

What is clear is the current populist shift to nationalism in global supply chains marks the biggest swing in trade systems since the 1960s. What we need to realise as investors is which multinationals and trading firms can adjust to the new reality and which will face the challenges that they are unable to survive. Identifying these changes will be key to investing going forward.

 

2. China sandbagging

One of the fastest developing thematics of 2025 is signs that Beijing it’s starting to sandbag itself against future incoming tariffs from the West, specifically the US. Already we’re seeing changes to liquidity ratios, policy and local government that haven’t been in place since 2017 and 18.

We’re also starting to see policies around employment, aged care, and other social services that have not been enacted or tweaked in over half a decade. Couple this with signs of increased infrastructure spending changes to manufacturing orders and a shift in direction to internal purchases. Shows Beijing really does mean business And is preparing to fight fire with fire.

Most notably that ‘fire’ power is the tweaks that’s happening to the renminbi. The depreciation that has been allowed by the Peoples Bank of China (PBoC) shows very clearly that if tariffs are to be placed on Chinese exports the appearance at the import docks will be one of negligent, even better off positioning in price. It is a very, very savvy way of countering arbitrary cost increases from its biggest market, that of the US. How Washington responds to this change is likely to be just less dramatic. Be prepared for a full blown currency trade war over the next four years as Beijing and Washington trade economic barbs.

The winners and losers are already starting to present, case in point is the impact and slide in price of the Aussie dollar (AUD). Currently sitting at a 5 year low to start 2025 against the US dollar and having seen a 10 per cent decline against the JPY,  and 8 per cent decline against the CHF, EUR and even a 5 per cent decline against the GBP. The AUD’s China proxy thematic is well and truly kicking and the Aussie will be a key part of the China sandbagging thematic trade of 2025.

 

3. Meaningful living

Do not underestimate the change in social structures around ‘meaningful living’. With aging populations across the developed world more and more societies are shifting to pursue healthier and more meaningful lives. This is the rise of online and AI driven programming health treatments, new age drug consumption and a concentration on preventative medicine and health products.

Meaningful living is moving the dial in policy, economies, and businesses. You only have to look at Apple’s investment in its fitness app or the rise and rise of wearables. Increase content on social media and the impact that AI is now having on medical and health related industries. On this point look to healthcare, particularly AI-driven advancements and obesity treatments to continue to be the stand out areas.

Then there will be the changes to consumption behaviours, nutrition and affordable foods, ‘core value’ items over mass consumption as well as demand for more sustainable consumption practices.

The advantage of the meaningful living thematic is that it will likely be fairly isolated to the issues that will present from thematic 1 and 2. You will also be fairly insulated from changes of things like inflation, interest rates and politics.

 

4. Energy Thirst

The thirst for energy supply coupled with decarbonisation is going to be a thematic not just of 2025 but over the next decade. What will be different in 2025 is a short- and long-term supply change.

Once again, nationalism will play a part here – the Trump administration has made it a cornerstone of its re-election pitch that oil will be front and centre in the US’s energy supply. However at the same time Elon Musk’s presence makes the outlook for battery storage and Electric Vehicles (EVs) also very interesting. 

Longer term – energy will also face the ultimate question of 100 per cent renewables, a hybrid model that includes fossil fuels and/or a model that involves yellow cake. Uranium is facing an interesting period, the demand from China, France, the US and the like for nuclear energy is growing by the year. We are also now seeing nations that have never entertained nuclear having a debate on it as well (Australia is case in point).

Thus from a trade and investment point of view – we need to consider three points here: 

Supply – who are the suppliers that will benefit short term who benefits long term? And are there players that will benefit over the entire period?

Demand – As stated in thematic 1,2 and 3 energy demand is only going to increase and if we include thematic 5 – not only will demand increase it could move almost exponentially.

Delivery – what form of apparatus is needed to deliver the energy nations need? That means everything from renewables to nuclear, micro units (household solar) to macro units (power plants). As well as energy storage, carbon capture and grid optimisation.

 

5. AI the third digital revolution

It’s been two years since ChatGPT’s debut – and in those 24 months more value has been created than in the 65 years from 1945 to 2010 and we are still early in AI’s widespread adoption. 

AI is being called the third digital revolution after the invention of the computer and the internet.

The difference in 2025 from 23 and 24 is we are moving from “infrastructure” and “enablers” to applications. Those programs that will drive efficiency and market leadership.

Already the fight is on to be the “it” provider here as the likes of Alphabet, Meta, Microsoft and Amazon continue to redefine their individual offering.

The trends here that will matter in 2025 are things like enterprise adoption of AI, which firms are adopting AI and its positive impacts? Rapid increases in AI capabilities, surprising even the most optimistic expectations and how fast can it move? Expanded profit opportunities, reducing debates over AI’s return on investment.

The faster we can understand the pace of these changes the more investors can capitalise on AI’s transformative potential.

In short, with these five thematics as our basis for 2025, it will be an exciting and transformative year.

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