The investment landscape for 2025 is entering a new phase shaped by “mega forces” like AI, the energy transition, and geopolitical fragmentation, according to BlackRock Investment Institute’s 2025 Midyear Global Outlook (pdf). As inflation and fiscal discipline become less reliable, BlackRock advises focusing on regions and sectors most exposed to structural shifts, naming the Middle East, US, and India as key markets to watch.

The Middle East is a key player in this global transformation: BlackRock highlights Saudi Arabia, the UAE, and Qatar as countries successfully positioning themselves at the intersection of AI, energy, and geopolitics. The region is attracting investment through mega infrastructure projects, green hydrogen plans, and local AI hubs. For example, the Kingdom’s national AI strategy is targeting USD 20 bn in investment by 2030, while Abu Dhabi’s sovereign funds are pouring USD 10 bn into local chip plants and data centers. The UAE is also expanding high-tech freezones, while Qatar is aiming for 50% non-oil GDP by 2030.

A tactical approach is driving decisions: With long-term macro anchors weakening, BlackRock remains overweight on US equities, supported by strong earnings and AI momentum, while maintaining a neutral stance on China and Europe. Japan stands out with positive momentum driven by shareholder-friendly reforms and the return of inflation. The firm also sees local currency-denominated emerging market bonds becoming “more attractive in a whole portfolio context,” according to the report.

AI is powering US market strength: BlackRock views the evolution of AI happening in three phases — buildout, adoption, and transformation — with the current phase focused on infrastructure buildout, which is boosting capital expenditures among major tech firms. Companies tied to semiconductors, power utilities, and data infrastructure are positioned to benefit the most. US technology companies are also leading in earnings growth, reinforcing BlackRock’s overweight position in the sector.

Infrastructure is at the center of these trends: Infrastructure links many of the key global forces, including supply chain realignment, rising energy demand, and decarbonization. BlackRock sees infrastructure investment as a growing segment of the market that supports long-term capital allocation. In the Middle East, capital is flowing both from sovereigns and global investors into infrastructure, as the region pushes more towards economic diversification. Private infrastructure assets under management have already surpassed USD 1 tn and are projected to exceed USD 2 tn by 2028, with activity led by Europe and North America.

Private capital is becoming more important in funding transformation: With governments facing tighter fiscal constraints, private markets are stepping in to fill the funding gap for infrastructure, AI, and energy transition projects. BlackRock sees this not as a temporary fix, but a structural shift in how capital is raised. Companies are staying private longer, increasingly relying on private credit and equity instead of going public. The average age of firms at IPO has nearly doubled over the past two decades.

MARKETS THIS MORNING-

Asian markets are broadly trading in the red this morning, with South Korea’s Kospi index bucking the trend to trade up around 0.6%. Investors are looking at another day of mixed signals, as US President Donald Trump announced a trade agreement with Vietnam yesterday, but the 90-day pause on reciprocal tariffs for several US trade partners is due to expire next Wednesday.

Meanwhile, Wall Street futures are trading flat, suggesting the S&P 500, Dow Jones, and Nasdaq are due for a muted open later today.

ADX

9,920

-0.1% (YTD: +5.3%)

DFM

5,669

-0.4% (YTD: +10.0%)

Nasdaq Dubai UAE20

4,678

-0.2% (YTD: +12.3%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.0% o/n

4.2% 1 yr

TASI

11,130

+0.1% (YTD: -7.7%)

EGX30

32,821

+0.4% (YTD: +10.3%)

S&P 500

6,227

+0.5% (YTD: +5.9%)

FTSE 100

8,775

-0.1% (YTD: +7.4%)

Euro Stoxx 50

5,319

+0.7% (YTD: +8.6%)

Brent crude

USD 68.89

-0.3%

Natural gas (Nymex)

USD 3.50

+2.5%

Gold

USD 3,358

+0.3%

BTC

USD 109,193

+3.2% (YTD: +15.6%)

Chimera JP Morgan UAE Bond UCITS ETF

AED 3.59

0.0% (YTD: +0.7%)

S&P MENA bond & sukuk

145.93

+0.3% (YTD: +4.3%)

VIX (Volatility Index)

16.64

+1.1% (YTD: -4.1%)

THE CLOSING BELL-

The DFM fell 0.4% yesterday on turnover of AED 674.7 mn. The index is up 10.0% YTD.

In the green: National Cement Company (+12.7%), Al Mazaya Holding Company (+10.5%) and Orascom Construction (+10.0%).

In the red: Al Mal Capital REIT (-10.0%), National Industries Group Holding (-9.7%) and Dubai National Ins. and Reinsurance PJSC (-8.7%).

Over on the ADX, the index fell 0.1% on turnover of AED 1.1 bn. Meanwhile, Nasdaq Dubai was down 0.2%.

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