Investment Watch Autumn 2025 Outlook
Investment Watch is a quarterly publication for insights in equity and economic strategy. US President Donald Trump’s “liberation day” tariffs have rattled global markets. Since the pronouncement, most global indices have been down by over 10%.
Investment Watch is a quarterly publication produced by Morgans that delves into key insights for equity and economic strategy.
This publication covers
Economics - Tariffs and uncertainty: Charting a course in global trade
Asset Allocation - Look beyond the usual places for alpha
Equity Strategy - Broadening our portfolio exposure
Fixed Interest - A step forward for corporate bond reform
Banks - Post results season volatility
Industrials - Volatility creates opportunities
Resources and Energy - Trade war blunts near term sentiment
Technology - Opportunities emerging
Consumer discretionary - Encouraging medium-term signs
Telco - A cautious eye on competitive intensity
Travel - Demand trends still solid
Property - An improving Cycle
US President Donald Trump’s “liberation day” tariffs have rattled global markets. Since the pronouncement, most global indices have been down by over 10%. The scope and magnitude of the tariffs are more severe than we, and the market, expected. These are emotional times for investors, but for those with a long-term perspective, we believe short-term market volatility is a distraction that is better off ignored.
While the market could be in for a bumpy ride over the next few months, patience, a well-thought-out strategy, and the ability to look through market turbulence are key to unlocking performance during such unusual times. This quarter, we cover the economic implications of the announced tariffs and how this shapes our asset allocation decisions. We also provide an outlook for the key sectors of the Australian market and where we see the best tactical opportunities.
Morgans clients receive exclusive insights such as access to our latest Investment Watch publication. Contact us today to begin your journey with Morgans.

- Heading into February results, we examine key strategic themes across earnings trends, the cyclicals rotation, yield security, rising AUD impacts and resources.
- In our Reporting Season Playbook (accessible by Morgans clients) our analysts preview the results for 184 stocks under coverage that report this February, calling out potential surprise and disappoint candidates.
- Key tactical trades into results include Sonic Healthcare, NextDC, Origin, Zip Co, Eagers Automotive, and Virtus.
Dampened expectations leave room for upside surprise
Investors have a lot to feel optimistic about as the economy continues to defy expectations (our chief economist Michael Knox is calling for a sharp V-shaped recovery) but analysts’ earnings and dividend forecasts are yet to capitalise the recent good form.
We think there is a risk of surprise in company results that have significant leverage to the recovery.
Domestic cyclicals outperforming overly fearful market expectations was a dominant theme in August and analyst previews of the 184 stocks under Morgans coverage suggest this trend will continue in February.
Our analysts expect that 28% of stocks covered have reason to respond positively to February results.
Various moving parts requires careful portfolio positioning
Investors need to position tactically into February results. Overall, we expect outlook commentary to be better than what was provided in August and we think the outlook for dividends has improved markedly.
But while the recent good form in the economy will benefit segments of the market (retailers, banks, resources), elevated valuations and currency headwinds will temper the performance of others (healthcare, offshore industrials/fintech).
We discuss key strategic questions:
- Can cyclicals deliver expected EPS upside surprise?
- Where’s the best source of secure yield?
- Will currency moves complicate the FY21 earnings picture?
- Do recovery expectations match reality?
- Does the resources rally have further to run?
Commodities/resources upside
An overweight exposure to resources shapes as one of the strongest sector allocation ideas for 2021.
Commodities tailwinds include improving post-COVID GDP growth, ongoing central bank stimulus, tight supply, and the weaker US dollar.
The best opportunities in the sector are in lagging energy and gold sectors.
Best tactical calls heading into results
In our Reporting Season Playbook, our research team previews expectations for 184 stocks reporting in February, including 52 where we expect positive price reactions, and 11 where we expect negative reactions.
We also profile the best looking tactical buys and notable stocks to avoid/trim. In this list we prefer larger stocks and those that overlap with the Morgans Best Ideas and the Morgans Equity Model Portfolios.
Morgans clients receive access to detailed market analysis and insights, provided by our award-winning research team. Begin your journey with Morgans today to view the exclusive coverage.

Every day, you’ll read stories about people who’ve struck it rich (or simply got lucky) by taking a punt on the latest hot opportunity. It might be a stock that’s tripled in value, or the latest digital currency that’s being heavily promoted online.
It doesn’t matter which; all you know is that somewhere, somebody’s making a stack of money, and it’s not you.
You might even think you’re missing out, particularly if your investments are still recovering from the downturn last year.
You could be tempted to throw caution to the wind, and have a dabble in something hot.
Let’s just pause for a moment, and consider the difference between speculating and investing. One way to describe speculating is taking big risks, hoping you’ll get a big payoff.
That’s not what investing is about. Investing is about managing risks, not embracing them.
Manage the risk
One of the best ways of reducing investment risk is to spread your portfolio across a number of different investments, and types of investments.
It's the old 'don’t put all your eggs in one basket' theory, and it’s stood the test of time as an important way of smoothing investment returns and reducing risk.
The main investment classes – cash, fixed interest, property and shares – all carry different levels of risk, and all have provided different returns over time.
Historically, shares have been the best performer. But those returns have varied from a 30% gain in a good year, to a 50% loss in a bad year.
And nobody can predict which types of investments will perform best in the future.
At the other end of the spectrum, cash is safe (and there’s a government guarantee on bank deposits of up to $250,000).
But the return? In most accounts, it’s close to zero. If you take into account inflation, your bank return can actually be negative. If you hedge your bets, and spread your portfolio across cash, fixed interest, shares and property, there’s the potential for losses in one class of investment to be offset by gains in another.
You won’t get the peak returns of the share market in a boom year, but neither will you experience large losses.
Overall, your risk is lower, and your returns will be more consistent.
What is strategic asset allocation?
Strategic asset allocation is the process of choosing the mix of investment types that will meet your investment objectives, while minimising risk. And the best asset mix for you will depend on your investment timeframe, and how comfortable you are with risk.
There’s no one fixed asset allocation – it will vary between individuals.
A younger investor hoping to build wealth for the future might be comfortable with a high exposure to shares.
Somebody approaching retirement might be more cautious and balance their exposure to shares with higher levels of cash and fixed interest.
Setting a target asset allocation adds some discipline to your investment strategy.
It means sticking to a process that will optimise your returns, rather than chasing the hot opportunities that could make you rich (or broke).
Rebalance your portfolio annually
Just as there's no thing as a 'set and forget' investment, your asset allocation needs some attention from time to time.
At least annually, you should consider 'rebalancing' your portfolio. In any year, some of your investments will perform better than others.
Let’s suppose your original allocation to shares was 40% and the market has a good year. You might find shares now make up 50% of your portfolio. Rebalancing involves reducing your exposure to shares back to 40%.
In other words, you’re taking profits from assets that have performed well, and topping up your other investments.
Is your current asset allocation right for you?
If you’re not sure whether your current asset allocation is right for you, or you think it might need rebalancing, talk to your Morgans adviser or contact nearest Morgans office.

The Australian Government has completed a review of the retirement income system to assess how it will perform in the future as Australians live longer and the population ages.
The review, which was commissioned following a recommendation by the Productivity Commission, was not asked to make recommendations or propose changes to policy settings. However, it did uncover evidence that many aspects of the system need improved understanding.
Key observations and overview
The need to improve understanding of the system
- Dealing with complexity. Complexity and uncertainty, a lack of financial advice and guidance, and low levels of financial literacy are impeding people from understanding the system. As a result, some people fail to adequately plan for retirement and make poor decisions about how to use their savings in retirement.
- The nature of retirement income. Most people die with the bulk of the wealth they had at retirement intact. It appears they see superannuation as mainly about accumulating capital and living off the return on this capital, rather than as an asset they can draw down to support their standard of living in retirement. The family home is an underutilised source to support living standards in retirement.
- The nature of retirement. The nature of retirement has changed. For many, the transition from full time work to permanent retirement is gradual rather than abrupt. Some people retire more than once, others are involuntarily retired. There is no mandatory retirement age for most workers.
- The objective of the system. The retirement income system lacks an agreed objective. Differing views on the appropriate level of the Superannuation Guarantee (SG) rate stem from different views about the system's objective.
- Role of the pillars. The ‘pillars’ of the retirement income system are commonly seen as being the Age Pension, compulsory superannuation, and voluntary saving (including housing). Some see housing as a separate pillar.
- Dealing with diversity. The retirement income system covers people in very different circumstances: different incomes, time in the workforce, employment situation, capacity to save, home ownership status, risk preferences, financial literacy, partnership status and life events. While the system may provide adequate retirement incomes for many Australians, there is uncertainty about if and how it can compensate for those who may fall short, such as women, lower income renters, individuals not covered by the SG, involuntary retirees, Aboriginal and Torres Strait Islander people and those with disability.
Source: The Australian Government – The Treasury.
What does this mean for you?
This review has identified the need for greater financial advice for consumers, particularly when it comes to retirement planning, to help people understand the complex laws and regulations that are already in place.
Without this financial advice from qualified financial planners, you might be missing out on maximising your retirement potential.
Speak to one of our qualified Morgans advisers today to define your own retirement journey.

The A2 Milk Company (ASX:A2M) recently conducted its Annual General Meeting (AGM), maintaining its guidance amidst a backdrop of uncertainty. While the need for a significant 2H21 improvement is acknowledged, positive signs of recovery in corporate daigou demand and improvements in daigou channel inventory offer a glimmer of hope.
Revised Forecast and Investment Outlook
Forecast Adjustments
In response to prevailing uncertainties, our forecasts have been recalibrated. Despite A2M's guidance, we've adjusted our FY21 EBITDA forecast approximately 4% below the lower end of its guidance range, reflecting a cautious stance.
Investment Recommendation
Despite the prevailing uncertainty, we maintain an Add rating for A2M. While near-term earnings uncertainty may exert pressure on the company's share price, we remain optimistic about its medium to long-term prospects.
Maintained Guidance with Qualifications
Overview of 1H21 and FY21 Guidance
A2M has upheld its 1H21 and FY21 guidance as previously stated. 1H21 revenue is anticipated to be NZ$725-775 million, showing a decline of 4-10% compared to 1H20. FY21 revenue guidance stands at NZ$1.8-1.9 billion, with an EBITDA margin of approximately 31%, translating to EBITDA of NZ$558-589 million.
Dependency on 2H21 Improvement
Acknowledging the uncertain forecast, A2M stresses the necessity of substantial improvement in 2H21 (16-22% revenue growth compared to 2H20). This period's performance hinges on critical factors such as the daigou channel's improvement and sustained growth in China labeled products through the MBS channel.
Regional Updates
ANZ Region
A2M underscores the challenging trading conditions in 1H21, particularly due to the contraction in the daigou/reseller channel, exacerbated by Victoria's Stage 4 restrictions. However, recent weeks have shown initial signs of recovery in the corporate daigou, following the launch of incentive programs and the relaxation of lockdown measures in Victoria.
Asia Region
Sales growth in the MBS segment remains robust, driven by an expanded distribution footprint and increased sales velocities. The company's performance during the 11/11 sales event met expectations, with notable increases in English label IF sales volume.
North America Region
A reduction in FY21 EBITDA loss compared to FY20 is anticipated, aligning with previous forecasts.
Forecast Adjustments
Considering the uncertain 2H21 recovery, our revised forecasts stand below the guidance, projecting revenue of NZ$1,731 million and EBITDA of NZ$537 million for FY21.
Navigating Uncertainties Towards Growth
While uncertainties linger, A2M's comments on the improving daigou channel inventory offer a ray of hope. We view the current challenges as transitory, with A2M's robust balance sheet and quality growth trajectory underpinning our confidence in its long-term potential.
Morgans clients receive access to detailed market analysis and insights, provided by our award-winning research team. Begin your journey with Morgans today to view the exclusive coverage.

It seems Australians have been thinking more and more about the benefits of self-managed super funds (SMSFs) as they express concerns about their existing super fund in relation to transparency, liquidity and flexibility.
Despite the control, involvement and flexibility an SMSF can provide, there are a few things people need to consider before deciding if an SMSF is right for them.
Ask yourself the following questions:
- Is the fund strictly for benefits in retirement?
- Do you have the time to manage your own fund?
- Will the benefit be worth the cost?
- How will switching to your own SMSF affect your current superannuation benefits?
Having your own super fund to manage may sound easy. However, as you are the trustee of your own fund you are ultimately responsible for every decision you make. You need to understand there are some things you simply cannot do within your SMSF.
The regulator, the Australian Tax Office, will apply heavy penalties against trustees who break the law.
Watch
How much is enough?
This has been a hotly debated issue since the inception of SMSFs. Different people have different ideas as to exactly how much is needed to set up an SMSF. ASIC has recommended at least $500,000 for an SMSF.
It can be argued that people with less than this could easily manage their own SMSF, particularly if they are planning to make large contributions over time and/or have experience with investing.
The issue, of course, is cost. To remain cost effective it is generally accepted that the greater amount of funds pooled within the SMSF, the lower the cost average. Over the long term, as the SMSF account balance grows, the cost of running the fund becomes even more efficient.

# Paul and Mary are using a Corporate Trustee structure, which means an additional $455 ASIC fee. Bill and Ellie are using an Individual Trustee structure, so the only cost is the SMSF Trust Deed. * The ongoing company fee is a reduced ASIC fee because Paul and Mary are using a shelf company as the corporate trustee, and not an existing company. A shelf company acts as the corporate trustee only and is not associated to any other entity activities. ^ Administration fees charged by Morgans Wealth+ SMSF Solutions service and includes annual audit fee. This is an indicative cost only as the actual fee will depend on the administration/accountant service used. ** Ongoing portfolio fee - estimated average Morgans' Wealth+ fee
Size does matter
In relation to costs, clearly size does matter. There is a significant difference in the ongoing costs for Bill and Ellie compared to Paul and Mary. Even where Paul and Mary incur additional costs due to the corporate trustee structure, their average costs are less than half Bill and Ellie's.
If you would like to discuss whether a self-managed super fund is for you, or you would like to know more about what is involved in running your own SMSF contact your local Morgans office, or speak to your Morgans adviser.

"Our model tells us that on this occasion President Trump should be victorious over Biden by a margin of 5.76% of the popular vote. The predictive margin is 1.26 standard errors away from random. President Trump therefore has an 89.6% chance of being re-elected."
Listen to my podcast to find out where this data comes from. I also outline the stats prior to when Barack Obama was re-elected: