How to unlock Europe’s super strong stock market year

How should you position for 2025? My previous column detailed the shockingly big, Europe-led year I foresee. To harness its upside, you must position wisely. Here is how.

Step one to managing a portfolio: Always use a benchmark. Always!

A benchmark is any big, broad, market capitalisation-weighted index – one giving greater clout to firms with greater market value (unlike America’s Dow or Japan’s Nikkei, which weight constituents solely by share price).

The Straits Times Index (STI) and MSCI Singapore are market-cap weighted, but extremely narrow. A broader benchmark maximises opportunities and diversification.

I usually use the MSCI World Index, which includes nearly 1,400 companies across 23 developed markets, including Singapore. That becomes your blueprint. Analyse its components – sector weightings, country weightings, style tilts and, vitally, how those intersect.