Australia shares set for five% upside in 2025, UBS says

Investing.com– Australian shares are anticipated to push larger within the coming yr amid persistent optimism over decrease rates of interest and enhancing financial development, though their tempo of beneficial properties is predicted to average, UBS analysts stated. 

UBS expects the benchmark ASX 200 index to complete 2025 at 8,850 points- a document excessive, and a 5% upside from present ranges. The ASX 200 is buying and selling up 10.6% to this point in 2024. 

The brokerage stated the Australian financial system and shares seemed to be a “relative ‘protected port’” amid heightened commerce and geopolitical uncertainties. They anticipate native shopping for to additionally assist shares, and that buyers might purchase into the market looking for shelter from heightened U.S.-China tensions. 

Australia doesn’t have sufficient commerce publicity to the U.S. to attract tariff-related ire from President-elect Donald Trump. Washington and Canberra have additionally maintained shut relations on the safety entrance, making Australia a key ally within the Asia-Pacific area.

This relationship noticed Australia topic to little tariff motion throughout Trump’s first time period.

UBS expects mid-single-digit earnings development from Australian corporations in 2025, as an earnings downgrade cycle seen since 2022 involves a detailed and the Reserve Financial institution begins chopping rates of interest. UBS expects the RBA to kick off its easing cycle from Might 2025. 

The brokerage stated it most popular expertise shares on persistent themes of synthetic intelligence demand. Australian insurance coverage shares stand out on their “robust pricing energy and enticing relative valuation. Industrials are additionally enticing based mostly on their publicity to the U.S. financial system. 

UBS expects Australian mid-cap shares to clock additional outperformance in 2025, on energy in tech, classifieds and healthcare shares. 

The ASX 200 surged to document highs in November as expectations of enhancing international financial development spurred performs into economically delicate sectors. Main mineral and mining shares in Australia additionally benefited from bets on extra stimulus measures in China, which is a key export vacation spot.