CIO explains what drove appreciation this year and where he sees upside going forward
Early in 2025 Tyler Mordy put forward an idea called the ‘protectionist paradox.’ Looking at an incoming nativist administration in the US with loud talk of tariffs and a renewed push to reshore industry, the CEO & CIO of Forstrong Global Asset Management argued that protectionism from the world’s largest economy would have an unintended effect: it would force the rest of the world to respond with stimulus, investment and renewed domestic growth. Regional cooperation would deepen and global equity markets, rather than retreat, would ultimately benefit. Investing with that thesis in mind, his firm has delivered strong returns for their clients in 2025.
Mordy is quick to acknowledge that this was a welcome turn for many global investors, who he describes as “wandering in the wilderness” for much of the past decade as US markets outpaced and outperformed all others. Rather than a flash in the pan, though, he argues that this year represents the year 1 a global bull market that investors and advisors must prepare themselves for.
“The more the Trump administration pushed on these other countries — many of which were better prepared than markets assumed —the more these countries would try to stimulate their own domestic economies,” Mordy says. “That came through rate cuts, but more importantly through fiscal policy. Global markets underperformed in the 2010s largely because it was a long period of austerity. The policy burden rested entirely on the shoulders of central bankers. COVID changed all that. Today, there's a very large public appetite for fiscal policymakers to do more. We’ve seen that this year and it’s worked out in spades.”
The first signs of a global resurgence driven by fiscal policy came from Germany, which had long laboured under a significant public debt limit. Mordy explains that by breaking that taboo, Germany has been able to stimulate GDP growth and reinvigorate interest in European industrials, defense stocks, and European banks. Southern Europe, meanwhile, has emerged as an unlikely leader within the bloc after years of post-financial-crisis deleveraging. With the European Central Bank cutting rates eight times over the past 18 months, Mordy sees Europe now exhibiting the hallmarks of a classic cyclical recovery.
While the TACO trade saw a resumption in investor appetite for AI stocks after liberation day and broad European indexes traded flatter, Mordy notes that the European banking sector is a good indicator of future prospects for the continent, as it serves to measure liquidity and risk appetite. That sector is up well over 50 per cent year to date. Wages, too, are up in Europe while inflation seems relatively tame and corporate earnings are rising, offering the classic signals of a cyclical recovery.
Moving to Asia, Mordy has also seen a major shift away from China’s structural downturn. Over the last five years, China has worked to digest both its real estate bubble and its crackdown on entrepreneurs. It has now established leadership in a number of significant sectors, including electric vehicles and solar panels. The Chinese state has become more shareholder friendly in the past year, which has spurred new capital markets appreciation.
Chinese tech has also become a major area of investor interest, with big tech names offering somewhat similar exposure to the same themes as the US-listed magnificent seven stocks, but with more attractive valuations. As a result, Mordy says many investors have begun viewing Chinese tech as a more attractively priced way to access the AI theme.
Smaller global stories have taken root as well in 2025. Mordy notes the example of Chile, the world’s largest copper producer. Chilean equities have benefitted from a shift in Latin America towards greater economic self-sufficiency, while its massive copper mining sector has benefitted from the huge demand for that metal in the building of AI infrastructure. Japan has been another bright spot, with equities finally surpassing their 1989 peak as the country escapes its deflationary cycle, sees sustained wage growth, and benefits from stronger exports supported by a deeply undervalued yen.
While certain global markets may be at risk should the AI theme pull back slightly next year, notably South Korea and Taiwan, , Mordy believes the broader outlook for global investors remains constructive.. He argues that the narrative around deglobalization has evolved, and that a world of firmer borders can still be broadly growth-positive.
“Deglobalization is bullish for inflation, bullish for commodities, and bullish for new technologies,” Mordy says. “In many ways, it resembles the Cold War period between the U.S. and the Soviet Union — one of the most prolific eras for innovation and productivity. Competitive, beggar-thy-neighbour policies often end up being about out-innovating everyone else.”
For investors, that reality has meaningful implications. “It’s becoming very difficult to remain a purely domestic investor,” Mordy says. “Many investors have expertise in building North American centric portfolios. But the opportunity set has clearly moved beyond a single market. Over the past year, the biggest investment calls weren’t stock-specific — they were macro calls. Looking ahead, advisors will need to focus far more on the global forces shaping portfolio returns.”
