March 10, 2025 Edition

Welcome to this edition of our newsletter.?Global economic shifts are presenting both challenges and opportunities for investors. From the uncertainty surrounding U.S. tariffs and their potential impact on inflation to China’s deflationary struggles and private equity’s evolving landscape, understanding these dynamics is essential. In this newsletter, we’ll dive into the latest developments.?

Tariff Uncertainty and Economic Implications

(Source: CNN) President Trump's evolving tariff strategy continues to inject volatility into markets, with reciprocal tariffs on goods from Canada and Mexico set to take effect on April 2 after multiple delays. While the administration positions these tariffs as a tool to combat fentanyl trafficking, the broader economic consequences are harder to ignore. Uncertainty surrounding trade policies risks dampening consumer confidence, adding to recession concerns.

With markets on edge, diversification remains critical—particularly as Europe emerges as a strong investment destination, fueled by expected rate cuts and increased defense and infrastructure spending. Private credit also presents an attractive opportunity, offering a floating-rate structure that can adapt to inflationary pressures should tariffs drive price increases.

China’s Economic Headwinds and Policy Response

(Source: Financial Times ) China’s consumer prices fell into deflationary territory in February, declining 0.7% year-over-year—the first drop in over a year. While seasonal factors played a role, core inflation also declined for the first time since 2021, signaling deeper structural challenges. With producer prices in a prolonged downturn, Beijing has ramped up stimulus measures, including appliance subsidies and large-scale infrastructure investments.

The gap between the current deflation and China’s 2% inflation target suggests substantial room for further expansionary policies. Policymakers have the flexibility to introduce additional monetary easing and fiscal stimulus without immediate inflationary risks. However, the real challenge will be translating these efforts into stronger consumer confidence and sustained economic recovery. How quickly China can regain momentum will be a key factor for global investors in the coming months.

Private Equity’s Evolution and Secondary Market Opportunities

(Source: Livewire) Despite broader market volatility, private equity remains a compelling investment space, increasingly shifting towards skill-based value creation. Firms are prioritizing strategic M&A, revenue growth, and operational efficiency rather than relying solely on financial leverage. Extended fundraising cycles are also creating attractive opportunities for investors to enter partially funded portfolios, reducing blind pool risks.

A major trend reshaping private equity is the rising holding period for portfolio companies, which has now reached a record 5.7 years globally and 7.1 years in North America. This backlog of assets nearing exit creates significant opportunities in the secondary market, where investors can capitalize on discounted valuations. As funds face pressure to return capital to investors, this wave of liquidity events could provide compelling entry points for those positioned to deploy capital strategically.

Looking ahead, the interplay of tariffs and economic trends will be crucial for investors. With challenges in China and evolving opportunities in private equity, strategic diversification and proactive decision-making will be essential for navigating this uncertain landscape and securing future growth.?As always, we encourage you to?reach out to?Altive?for further discussion or support regarding these developments.

Disclaimer: This newsletter contains information from public sources, and any investment decisions made based on its contents are at the reader's own risk. Investing involves risks and might result in loss of capital invested. Past performance is not a guarantee of future results.

?Altive Limited (“Altive”, SFC CE Number: BPK587) is a first-class alternative investment platform in Hong Kong licensed under the Securities and Futures Commission (“SFC”) with Type 4 (Advising on Securities) and Type 9 (Asset Management) licenses. Altive only provides services to professional investors, defined in the Securities and Futures Ordinance and its subsidiary legislation. Altive does not provide tax, legal, or accounting advice. This newsletter should not be relied upon for tax, legal, accounting advice, or advice of any nature. Readers should consult professional advice before engaging in any transactions.