In its Global Market Outlook for the second half of 2025, Standard Chartered projected a constructive but volatile environment for investors worldwide. The bank sees significant implications for Middle East investors, driven by expectations of a softer U.S. dollar, resilient global equity markets and improving prospects for emerging-market assets.
The report highlighted that global macro conditions remain mixed. In the United States, growth continues to be supported by resilient consumption and fiscal stimulus, though trade and policy uncertainty may temper momentum in the second half of the year.
In Europe, fiscal easing increasingly offers support, but structural challenges persist, while China’s outlook is stabilizing on the back of targeted stimulus and improving retail activity. Meanwhile, growth in India and ASEAN is expected to remain well-supported.
U.S. dollar to weaken further over the next 6 to 12 months
Standard Chartered outlined an investment strategy reflecting evolving risks and opportunities, noting that it expects the U.S. dollar to weaken over the next 6 to 12 months. Therefore, it has accordingly upgraded Asia (ex-Japan) equities and Emerging Market (EM) local-currency bonds to Overweight. It added that global equities also remain an Overweight position across portfolios, supported by healthy earnings, easing trade tensions and controlled inflation.
“As global markets transition into a new phase, Middle East investors are well-positioned to capitalize on emerging opportunities. A weaker dollar historically supports returns across risk assets, particularly in emerging markets, which have long been core components of regional portfolios,” said Ayesha Abbas, managing director and head of affluent and eealth solutions, Europe, Middle East and Africa, and UAE at Standard Chartered.
She added that this outlook underscores a critical moment for investors in the region. As the global environment adjusts to weak U.S. dollar dynamics, shifting trade policies and diverging central bank actions, investors in the Middle East have an opportunity to reposition portfolios with greater international diversification.
“Asset classes such as emerging market bonds and equities across major regions (including non-U.S. equities) are well-placed to help investors navigate volatility, capture income and enhance portfolio resilience in today’s shifting landscape,” she added.
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Alternative investments in focus
As the U.S. dollar weakens, the report maintains a preference for dollar-denominated bonds in the 5–7-year maturity range, citing them as the most attractive in terms of risk-adjusted returns, particularly as yields begin to ease from current levels. Meanwhile, Developed Market Investment Grade corporate bonds have been downgraded to Underweight due to tight yield premiums and slower inflows.
Alternative investments are also in focus, with the bank highlighting gold as a core allocation, supported by strong central bank demand and its role as a diversifier when bonds offer less downside protection.
