Insight #1: A Consequential Year: The Global View

We expect 2025 to be a consequential year. The world witnessed dramatic changes in the very first week of the new Trump administration, and it quickly became clear that the disruption to business, life and culture will not be felt only within US borders.??

Deregulation, proposed tax reductions, decreased bureaucracy, and a broader emphasis on "business-friendly" policies in the U.S. have created optimism for investment, growth and strong market performance. However, cuts in standards of governance and deliberate moves away from responsible business practices have some market participants worried about quality of earnings and long-term sustainability.?

The erosion of business integrity, coupled with the normalisation of misinformation and fake news, introduces volatility and instability as industries and societies grapple with evolving norms. It also makes parenting – and educating – difficult as we try to help young people critically navigate a world of rising fascism, nationalism, protectionism and hatred. What amounts to a reversal of years of progress spills onto their screens every day, as it does ours.?

Impact on Private Equity investments?

There are already signs of a boon for AI and crypto-related investments, which have been buoyed by promises of deregulation and explicit policy support. Technology investment trends are being impacted by other forces, too, which will be the subject of another upcoming Insights piece.??

Energy is an interesting area. Despite the new administration’s proclivity for fossil fuels, renewable energy may still benefit from growing energy demands, largely driven by accelerated rollout of energy-hungry AI, crypto and data centres. Blue states are expected to maintain caps on emissions, irrespective of new national objectives, thus directing demand for renewable sources.?

Potential inflationary impacts of trade tariffs and mass deportations, and resultant elevated interest rates, are also on the risk radar of consumer-facing businesses in the US. These pressures may spill over for other countries if trade wars erupt and supply chains are disrupted. With interest rates easing at a slower pace than expected, private equity is unlikely to benefit as much as was hoped. Foreign currencies, especially emerging markets, may remain weaker as a result of prolonged elevated US interest rates, with knock-on inflationary impacts outside the US.??

In our portfolio, we are already seeing signs of new opportunities arising from these changes. M&A activity and IPOs have also shown signs of a comeback, offering a more favourable exit environment (the topic of another upcoming Insights piece). However, economic nationalism and bilateralism could disrupt global alliances and trade, again making this unpredictable. Until the dust settles, we can’t say for certain who the winners and losers will be in this vastly changing market.?

Fallout far and wide?

The hundreds of executive orders already signed by the new US administration have sent shockwaves far and wide. The sudden and far-reaching moratorium on US foreign aid is having a profound effect globally, with well-established programmes being brought to a grinding halt pending a 90-day review for alignment with the administration’s America First Policy. Whilst this may not have a direct impact on business, the potential for destabilisation of communities around the world cannot but affect the markets they operate in. Our thoughts are with the beneficiaries and administrators of these important programmes as they navigate potentially existential risks.?

How the geopolitics of the day plays out is best left to the experts to opine on. Suffice to say, it will be a consequential year for all of us.?

Takeaways?

Opportunity always exists in change and challenge. Seek it out and grasp the moment.??

Stay true to what you and your organisation stand for – we owe it to future generations as the world navigates some previously unimagined shifts.??

Adaptability and agility should be top of mind for any business or investment professional. We simply cannot know what forces will prevail with such far-reaching changes around us.?