Sasfin Global Equity Model - Quarterly Review Q1 2025

SGEM is designed for investors who can weather short-term market swings in pursuit of long-term, compounding growth.

Join Jonathan Wernick, Senior Equity Analyst, and Craig Pheiffer, Chief Investment Strategist, as they unpack SGEM and its approach to global investing. Watch the full video here:

U.S. equities endured a challenging quarter with the S&P 500 index ending the quarter down 4.4%. Investors, particularly foreign investors outside of the U.S, have grown concerned around the possible negative impacts of “Trumponomics”. The U.S. Federal Reserve (“Fed”) slashed its forecast for GDP growth to just 1.7% and raised its expectations around inflation as it factored the impact of tariffs into its economic outlook.
The concept of “American exceptionalism” has also come into question. For decades, the U.S. has led the world in terms of new technologies, with artificial intelligence (“AI”) the latest in a long line of developments. A little unknown Chinese startup called “Deepseek” threatened to upset the apple cart, casting doubt over the idea that America still leads the pack, at least when it comes to technology. The Chinese firm showcased an AI model that was just as capable as the leading fronter models developed by American tech firms. The Chinese firm was however able to do so at a fraction of the cost – millions vs. billions. Though the true cost of development was significantly higher than originally reported by the media, the fact that a Chinese firm was able to develop a technology competitive with that of the U.S. continues to linger. U.S. technology firms fell sharply on the news. The tech-heavy Nasdaq index, slid into correction territory, having declined 10.3% during the quarter.

European equities were a key beneficiary of U.S. weakness as investors switched into “safer” alternatives. The STOXX Europe 600 index outperformed its U.S. counterparts having gained 5.8% during the quarter. Equities were further boosted by plans of European leaders to incentivise investment in European equities as well as increase spending in certain sectors. Of particular focus will be the defence sector. The long-standing peace dividend era draws ever closer to an end, as Trump continues to dangle the threat of NATO withdrawal.
Asian equities were mixed during the quarter. Hong Kong-listed technology equities led the Hang Seng Index 16.1% higher. Cheap valuations and the emergence of Deepseek attracted investor’s attention to the cohort despite the threat of higher tariffs. Mainland Chinese equities were however negatively impacted by the growing trade war with the U.S. as the CSI 300 Index ended the quarter down 1.0%.
Japanese equities underperformed during the quarter as the Nikkei 225 index fell 10.1%. Factors that contributed towards the negative performance include the impact of tariffs as well as higher interest rates. The Bank of Japan raised the country’s key interest rate by 25bps to 0.5%, its highest level in 17 years.

The BoJ’s previous rate hike in July of last year surprised the market, causing panic to spread as the yen carry trade unwound. The increase was far less eventful this time round as the yen continues to strengthen against the U.S. dollar.
The U.S. dollar also slid against major European currencies as investors weighed the impact of slowing GDP growth for the U.S. against a rosier outlook for the European region. Despite the prospect lower economic growth, the Fed has kept its powder dry, opting not to cut interest rates. The fall in U.S. real yields, which exclude inflation, reflect the outlook for lower growth. The yield on the 10-year Treasury inflation-protected securities (“Tips”) fell 39bps to 1.85% during the quarter.
Gold ended the period at $3,123/ozt, a gain of almost 20.0%. Concerns, specifically those of central banks, around U.S. dollar weakness, has led to sharp gains in the price of the yellow metal.
Oil prices ended the quarter relatively unchanged from the start of the year. An outlook of lower economic activity as well as increased production combined to keep the prices of Brent crude and WTI in check. The pair ended the quarter at $71 and $75 a barrel respectively.

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