Capital Markets 2025: Shaping and Scaling the Future | Global Conference 2025

Macroeconomic & Policy Shifts

• Seema Kenji identifies a structural shift driven by the post-pandemic transfer of debt and resilience from governments to corporates and households, contributing to the current high level of sovereign debt.
• The Trump administration's policy triad (tariffs, tax cuts, deregulation) is characterized as interrelated: tariffs aim to raise revenue to offset tax cuts, while deregulation seeks growth to manage debt.
• Panelists anticipate a decade of "low returns and high volatility," suggesting the business cycle is effectively dead and post-Great Financial Crisis (GFC) return norms are unlikely to return.
• A "trust deficit" regarding the US dollar's status as the global reserve currency has emerged, driven by trade imbalances and policy unpredictability, distinct from the pre-existing trade deficit.
• US debt sustainability relies on the dollar's reserve status, which requires a fundamental balance in trade; maintaining this supremacy may necessitate volatility and trade friction.

Market Volatility & Liquidity

• Recent market dislocations are described as "orderly" compared to historical crises (1998, 2008, 2020), with regulators receiving credit for preventing corporate failures during sell-offs.
• Despite rhetoric, there is no evidence of sovereign wealth funds or central banks dumping US Treasuries; long-term investor behavior remains patient despite short-term noise.
• The IPO market is currently paused, not due to a lack of capital demand, but because companies cannot articulate investment theses amid uncertainty regarding supply chains, capital structure, and tariff impacts.
• M&A activity shows a "pause and see" approach, with boards hesitant to launch deals due to policy ambiguity, though high-quality assets continue to find receptivity.
• Liquidity remains available and panic is absent in the corporate bond market, though high-yield activity is currently restricted to acquisition financing and refinancing.

Geographic Opportunities & Regional Dynamics

• Asia: The region is actively building internal trading networks, with ASEAN potentially becoming the world's fourth-largest trading bloc; India is highlighted as a primary growth engine due to aggressive deregulation and new leadership demographics.
• India: Investors note a shift from post-colonial elites to diverse, locally-focused leadership; while valuations are historically high, the structural economy is viewed as fundamentally different from 20 years ago.
• Europe: A nascent shift toward deregulation and fiscal stimulus is occurring (notably in Germany), challenging the historical narrative of European market stagnation; however, reshoring and industrial capacity building are multi-decade processes (10–15 years).
• North America: Interdependence between the US and Canada remains critical; panelists reject the notion of a permanent fracture, anticipating bilateral negotiations to resolve trade frictions.
• China: While geopolitical tensions persist, the risk of rapid capital reallocation to China remains low but non-zero; the "China Plus One" strategy is a tailwind for regional markets like India but not a total replacement for Chinese supply chains.

Capital Markets Structure & Future Outlook

• The IPO ecosystem faces structural hurdles: the dominance of large passive asset managers makes $50M–$10B IPOs unattractive due to insufficient aggregate impact on their portfolios.
• Gold prices (~$3,500) are acting as a defensive barometer for the "trust deficit" and apprehension regarding asset allocation in a volatile environment.
• AI and technological innovation are cited as key drivers for future equity valuations, with technology-driven market makers citing significant efficiency gains in trading volumes.
• Corporate leaders are advised to adopt scenario analysis and stress testing for balance sheets, prioritizing liquidity and financial resilience to survive potential "wild swings" in markets.
• The Federal Reserve is viewed as potentially secondary to fiscal policy in the coming decade, constrained by the need to avoid a resurgence of inflation while managing high debt rollovers.
• Forward-looking consensus suggests a higher probability of equity market gains over a 3–5 year horizon rather than predicting an all-time high for the S&P 500 within the current calendar year.
• Investors are encouraged to maintain long-term conviction in US assets, leveraging volatility to acquire quality companies rather than exiting the market based on short-term noise.