Emerging Investment Trends and Opportunities in 2025

Political shifts in the United States, geopolitical risks in Europe, and customs tariffs affecting global trade—combined with uncertainties surrounding Turkey’s economic normalization process—require investors to manage both domestic and international risks with great care.

Political shifts in the United States, geopolitical risks in Europe, and customs tariffs affecting global trade—combined with uncertainties surrounding Turkey’s economic normalization process—require investors to manage both domestic and international risks with great care. High market volatility continues to challenge long-term investments in a single asset class, creating a need for well-diversified portfolios. As a result, investors will increasingly seek to adjust their asset allocations across various classes to enhance returns while mitigating risks.

Macroeconomic Impacts and Equity Markets

In 2024, the implementation of inflation accounting—excluding banks and financial institutions—obligated companies to adjust production, fixed asset, and capital costs for inflation. This regulation led to a decline in reported profits for many companies due to accounting differences. At the same time, the Central Bank of Turkey’s tight monetary policy increased borrowing costs and slowed down economic activity, causing a contraction in corporate revenues compared to 2023.

As a consequence, equities that performed well in the first half of 2024 lost value and fluctuated within a narrow range during the second half. However, as we enter 2025, the gradual fading of inflation accounting effects, consistent implementation of sound economic policies by the Central Bank, and transparent communication with markets are expected to accelerate economic recovery. A controlled reduction in interest rates—without triggering shocks in currency or inflation—will improve credit conditions and enable banks to play a more active role in lending, thus expanding credit volume and profitability.

Falling inflation and interest rates will boost consumer confidence, revitalizing sectors such as white goods, automotive, and real estate. From a valuation standpoint, the banking sector is expected to outperform others in terms of earnings growth. In contrast, the impact of inflation accounting may make industrial firms appear expensive based on valuation multiples. However, rising revenue growth in line with the recovery will help bring company valuations back to attractive levels, creating new opportunities for investors.

Taking all these factors into account, the second half of 2025 is projected to be favorable for equity investments. Nevertheless, ongoing trade wars and geopolitical tensions across global markets remain key risks, potentially keeping global risk perceptions above average and slowing international capital flows.

Currency-Based Returns and Policy Effects

In 2024, investors in FX-protected deposit schemes (KKM) and the U.S. dollar faced real losses of 20–25%, whereas those who invested in Turkish Lira (TRY) deposits or money market funds earned returns above inflation, closing the year with real gains. The Central Bank's tight monetary stance and upcoming interest rate cuts are likely to sustain foreign interest in Turkish Lira assets through carry-trade opportunities. Investors may increasingly favor liquid and arbitrage funds offering returns higher than conventional bank deposits.

Due to tight monetary policy, real credit volume declined compared to the previous year. This caused banks to hold onto excess TRY liquidity, which they couldn't extend as loans—leading deposit rates to remain below market norms until lending conditions improve.

Safe Havens and Global Uncertainties

Concerns over escalating trade wars and the U.S.’s open competition with China in AI and global trade have caused volatility in other currencies against the U.S. dollar. In such an environment, gold and other precious metals are once again perceived as safe havens and are likely to continue gaining space in investor portfolios in 2025.

Donald Trump’s reelection in the U.S. and his subsequent remarks on the crypto markets triggered a rally in digital assets. While Bitcoin surged past the $110,000 mark, the launch of Deep Seek and growing concerns that Chinese AI firms—requiring less advanced processors and infrastructure—could surpass their U.S. counterparts sparked a wave of profit-taking. This affected both U.S. equities, which had reached historic highs, and the crypto market. The so-called “Magnificent Seven” tech stocks, led by Nvidia, saw a 10–20% drop, leading to a sharp correction in U.S. indices.

According to Bloomberg Intelligence, the generative AI market is projected to reach $100 billion in 2025 and $350 billion by 2030. Having stood at $50 billion in 2024, this market is expected to offer major growth opportunities for companies in microprocessors, data storage, memory, infrastructure technologies, and the energy sector over the next five years.

However, the biggest concern is that the U.S.–China tech race might limit business opportunities for U.S. AI companies in China, preventing them from realizing projected growth. Investors may consider taking positions in tech stocks with strong growth potential, particularly during corrections in international markets. Investment funds focused on AI-based technology and service providers can be a preferred choice.

Defense Sector Investment Themes

Another emerging theme is defense spending, particularly in Europe. Countries like Germany, France, and Italy—worried they may not receive sufficient military support from the U.S. against Russia—announced plans to increase defense budgets from 1–1.5% of GDP to 2–3%. These investments are expected to contribute an average of 0.3–0.4% to annual GDP growth in Europe over the coming years. Spending will be directed primarily toward defense technologies, modernization, and infrastructure investments. Investors can easily gain exposure to this theme through dedicated investment funds.

Conclusion: Risks and Opportunities in 2025

In summary, 2025 is poised to be a dynamic year for investors—offering both opportunities and risks. Staying informed on both local and global developments and maintaining a well-diversified portfolio will be crucial for effective risk management.

To properly diversify your portfolio, learn more about BV Portföy’s investment funds, and identify the best options tailored to your needs, feel free to reach out to us.

The most effective way to manage your investments with confidence, diversify your portfolio, and minimize risk is through the expertise of BV Portföy.