CleverMPS. 2025 5 Major Markets

Market Update Summary.

• Asia ex Japan: China’s stimulus revives confidence as Korea and Taiwan surge on AI tech; India disappoints.

• Europe:  ECB cuts and Germany’s €500 billion plan ignite value-led rally across banks and industrials.

• Japan:  BoJ ends negative rates; yen weakness and corporate reforms attract foreign inflows and boost exporters.

• North America: Fed easing and tech rebound offset tariff shock; strong earnings keep momentum alive

• UK:  Rate cuts and resilient domestic sectors drive standout year, supported by cooling inflation and buybacks.

• 2025 was a strong year for global equity markets, with most major indices delivering double-digit returns.

Asia Pacific Excluding Japan. [+23.15% return for 2025]

Across Asian ex-Japan markets, a weak US dollar and a turning point in Fed policy unlocked regional

liquidity, enabling central banks from Korea to the Philippines to begin easing. This backdrop powered a strong rally in technology and semiconductor names, especially in Korea and Taiwan, underpinned by global AI momentum. Meanwhile, China’s coordinated stimulus in areas such as infrastructure and property breathed new life into its markets, helping ignite broader confidence by mid‑year. Corporate reforms in Korea further attracted equity inflows into sectors previously overlooked, while Southeast Asian countries capitalised on improved trade and domestic demand. Only India bucked the trend, posting its weakest relative performance in decades. However, gains across China, Korea, Taiwan, and ASEAN overcame that drag to deliver an impressive 23.15% return in 2025.

Europe Excluding UK. [+26.18% return for 2025]

In Europe ex‑UK, a decisive policy shift underpinned 2025's rally. The ECB’s pivot to rate cuts and

supportive forward guidance freed up liquidity just as Germany unveiled a historic €500 billion

infrastructure and defence plan—fueling investor enthusiasm. As U.S. tech valuations cooled and the dollar weakened, global capital rotated into European value-oriented sectors like banks, industrials, and utilities. Meanwhile, cyclical earnings strength—particularly in manufacturing and financials—provided fundamental support. Robust Q3 profits and fresh inflows into European equity funds reinforced momentum, while a weaker euro boosted exporters. Together, these factors culminated in a strong 26.2% return for MSCI Europe ex‑UK in 2025.

Japan.

[+16.02% return for 2025]

In Japan, the Bank of Japan moved away from negative interest rates, raising its main rate to 0.5% and ending its bond yield controls. This helped stabilize markets and improve confidence. A much

weaker yen, falling to around ¥168 per dollar, boosted exporters and lifted company profits. At the same time, corporate reforms—such as reducing cross-shareholdings and increasing dividends and share buybacks—made Japanese companies more attractive to investors. Foreign investment surged in April as Japan was seen as a safe option during global uncertainty caused by US Tariff policy. Finally, government support and strong global demand gave a lift to Japan’s semiconductor and tech sectors. These factors combined to deliver a 16.02% return for MSCI Japan in 2025.

North America.

[+9.93% return for 2025]

In North America, markets navigated a volatile but ultimately positive year. The Fed’s shift from tightening to cautious easing lifted confidence, while US companies delivered robust earnings,

especially in Q2, with over 80% beating expectations. April’s surprise “Liberation Day” tariffs led to a

sharp but short-lived sell-off, hitting growth and tech stocks. This enacted our MSDS system, lowering

our Active fund exposure, until normality returned. Tech rebounded strongly, fueled by renewed AI optimism. Oil prices dropped amid global oversupply and tariff fears, which dampened energy sector returns. Throughout, strong inflows into US equity — led by record demand for the S&P 500 — helped support gains. These combined forces drove MSCI North America to a solid 9.93% return in 2025.

UK.

[+25.80% return for 2025]

In the UK, markets surged 25.8% in 2025. The Bank of England’s rate cuts backed up sectors like retail and utilities, lifting overall sentiment. April’s surprise “Liberation Day” tariffs hurt trade-exposed

stocks temporarily, but domestic businesses took over the lead. Companies reported stronger earnings, especially in finance and industry, with 70% outperforming expectations. While active fund flows remained weak, demand for low-cost passive funds supported the rebound. A cooling inflation environment and steady consumer spending bolstered confidence, while attractive valuations spurred buybacks and M&A. Together, these forces drove a standout year for UK equities.

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Sources

Risk Warnings

Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting portfolios. Investments may include emerging market, smaller company and commodity funds which may be higher risk than other asset classes. Investments in fixed interest funds are subject to market and credit risk and will be impacted by changes in interest rates. Changes in exchange rates may affect the value of the underlying investments. Investments in Property funds carry specific risks relating to liquidity. Property funds can go through periods, known as ‘gating’, when it may not be possible to trade in or out of the funds and to access your money during such periods. The portfolios may invest a large part of their assets in funds for which investment decisions are made independently of the portfolios. If these investment managers perform poorly, the value of the portfolios is likely to be adversely affected. Investment in funds may also lead to additional fees arising from holding these funds.

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