According to UBS, one of the major Swiss banking groups, global share markets further discounts risk In the short term, before being able to see a shy recovery by the end of 2025.
But what are the reasons for this prudence? AND which Scenarios are expected?
Let’s see what analysts say.
UBS estimates: because a reduction of the bags are foreseen
An important point of reference to understand the overall trend of the markets Global shareholders is the MSCI AC World index, which collects and summarizes the performance of the main world bags, both developed and emerging countries. According to the UBS forecasts, this index could close 2025 around 830, a level that – compared to current values - would represent a modest gain, equal to about +5%.
But be careful: this possible rise will not be linear or without shocks. The bank analysts, in fact, warn against the fact that, before arriving at that goal, the markets could live a phase of weakness. According to their central scenario, the index is likely to return to testing the recent minimums, or the lowest levels touched in the past months, if not even to go down slightly below them.
In practice, UBS does not exclude a rebound of the markets by the end of the year, but warns that before that recovery there may be still of the downhill road to go. This explains why, in the short term, we could witness new discounts, caused by factors such as disappointing profits, geopolitical tensions or macroeconomic data lower than expected.
For investors, therefore, the message is clear: 2025 could end with a positive balance, but only after passing a turbulence phase. In other words, before tracing, the bags they may have to touch (or retouch) the bottom.
The causes of the possible drop in actions
One of the main fragility that could push down the share markets is represented by expectations on corporate profits excessively positive. In recent months, that is, many analysts and investors have continued to project a sustained growth of business revenues, despite a still fragile economic context, marked by high inflation, restrictive monetary policies and geopolitical tensions.
But what happens when expectations are not realized? Financial markets are systems that move not only on concrete data, but also – and above all – on future expectations. If the listed companies are unable to center the expected growth targets, or even announce downward reviewsthe reaction of investors is often abrupt: The prices of the actions descendsometimes quickly, to realize the new reality.
UBS highlights a particularly significant data: each Reduction of 1% of global GDP On average, it translates into a drop of 8% of profits per action (EPS) worldwide. In other words, even a slight braking of economic growth can have amplified effects on the profits of companies, and therefore on their prices on the stock exchange.
To make the picture even more delicate is The strong exhibition of the United States. American companies represent almost 60% of worldwide profits: this means that a slowdown in the US economy – or a contraction in internal demand – could have a systemic impact, dragging entire sectors of global markets to the reduction.
Possible scenarios
Based on the data collected and analyzed, UBS builds three possible trajectories for 2025, or:
- Basic scenario (more likely): the world stock market drops in the coming months, then bounces up to 830 points by the end of the year, with a +5% of the overall performance;
- worst scenario: If commercial tensions remain and markets lose confidence in US solidity, the world index could go down to 680, or a 14%drop.
- optimistic scenario: in case of relaxation on the most expansive duties and monetary policies, the index could fly up to 910, equal to +15% from current values.
In any case, ubs invites cautionexplaining, in his report, that in most cases the discounts are physiological and temporary and do not prelude to a prolonged collapse. However, this does not mean that the danger is completely averted, because the possibility of further “slips” of the bags remains concrete, especially in the short term. The current global context, between still high interest rates, commercial tensions and geopolitical risks, can easily feed episodes of sudden volatility.
