Stock market outlook 2025

Stock market performance in 2024 was generally strong. In the United States, it marked the second consecutive year of strong growth, fuelled by the technology sector. Development was also very positive in Europe and Japan. China’s prolonged weak stock market performance turned upward in the fall, following economic stimulus measures announced by the Chinese central government. The Helsinki Stock Exchange, on the other hand, continued its subdued performance – for the third consecutive year. The AI boom, technology in general, and the strong performance of individual companies like Apple, Nvidia, and Tesla have raised the weight of the U.S. stock market in the global stock index to about 65%. The weight of the so-called "Magnificent Seven" or "Mag7" companies has already risen to about a third of the S&P 500 index. From a valuation perspective, the market can no longer be considered particularly cheap, but a significant portion of investor capital has flowed to the U.S. in recent years, with the flow accelerating further after Donald Trump’s election victory. The disproportionate valuation is evident, for instance, in the fact that the market value of Tesla is equal to the combined market value of all other car manufacturers in the world.

In Europe, development has been more divided. A few large technology companies, such as SAP and ASML, have performed excellently, as has the entire European banking sector, but manufacturing and cyclical industries have been underperforming. Political crises have weighed on France’s economic development, and the weak performance of China-linked luxury goods companies has impacted the local stock market. The Paris stock market, in fact, has performed as modestly as Helsinki’s. On the other hand, Germany, which is also grappling with weak economic growth, political entanglements, and a crisis in the automotive sector, has performed well on the stock market. The DAX index, which reached new records in 2024, can be explained by its structure: about half of the DAX index consists of international giants that are not very dependent on Germany's economic development. These companies include SAP and Siemens.

The weak performance of the Finnish stock market has been observed and puzzled over several times during the past year. Cyclical sectors have suffered from weak economic growth in Europe and China, and additionally Neste, a significant company on the Helsinki Stock Exchange, has been in a nearly free fall. The forest industry is struggling with record-high wood prices and simultaneously weak demand for end products and price pressures. Domestic companies are also suffering, as the rise in interest rates and inflation have burdened Finnish consumers. The earnings forecasts for Nordea and Fortum are declining in the near term. A notable exception in the generally weak Helsinki Stock Exchange has been Nokia. The company’s share price increased by 40% last year, which can be considered an excellent performance.

Economic and Geopolitical Factors Guiding Market Development in 2025

When forecasting stock market development for 2025, key themes include the new U.S. administration's trade policy, interest rate development in both the U.S. and Europe, geopolitical tensions, and prevailing market valuation levels. A central question is whether the favourable stock market development will continue, driven by technology companies. Decisions made by the Trump administration can be expected to generate headlines and market volatility. The relationship between China and Taiwan also remains a focal point.

Global stock market development will strongly influence price movements in Finland as well. However, the valuations of companies on the Helsinki Stock Exchange are generally at a very moderate level, which also supports the return outlook for the UB Finland Fund. For instance, the P/B (price-to-book) ratio is already approaching the levels seen during the crisis years of 2008–2009. Dividend yield is expected to be nearly 5% this year. A cyclical turnaround is on the horizon, and positive news is already coming from the forest industry – price increases for pulp have been announced. The decline in interest rates is expected to increase consumer confidence, which should also boost demand for end products and services. A proper turnaround naturally requires some support from Europe and, partly, China. There will likely be gems to find in smaller companies this year as well, and the Helsinki Stock Exchange should remain among the top performers in the Western markets in terms of returns.

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UB Finland suits investors seeking returns from the Finnish stock market. The fund invests in Finnish listed companies, and the fund's investment policy is active. It has no sector or size restrictions and invests in companies of all sizes. A large part of the fund's investments are global and are leading companies in their sector.

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The information presented is based on UB’s own estimates and sources considered reliable by UB. The information on which the conclusions are based may change quickly and UB Group may revise its market view without prior notice. No information obtained through this presentation should be construed as a solicitation to invest. When making investment decisions, readers should base their decisions on their own assessment of the investment and the risks involved, and to consider their personal goals and financial situation.

Investing in funds always involves financial risk. The value of an investment in a fund may go up or down and you may lose some or all of the capital invested. The past performance of a fund is not a guarantee of future performance and cannot be used to predict future returns. The target return set for a fund may not be achieved. The risks are set out in more detail in each fund’s key information document and in the fund prospectus. Before making an investment decision, investors should consult the fund’s key investor information document, fund prospectus, rules and price list, which are available on each fund’s website. The funds are managed by UB Fund Management Company Ltd. The portfolio management of the funds has been outsourced to UB Asset Management Ltd.