The Bid episode title: Tariffs, Tech and Transition: Europe and Asia’s Evolving Equity Landscape
Episode Description:
Following our last episode on U.S. equities with Carrie King, we’re expanding the conversation globally to understand how these dynamics are playing out beyond American shores. European and Asian equity markets are navigating a complex mix of geopolitical shifts, technological disruption, and evolving investor sentiment.
Helen Jewell, Chief Investment Officer for Fundamental Equities in EMEA, and Belinda Boa, Head of Active Investments for Asia Pacific at BlackRock, will unpack how equity markets across Europe and Asia are responding to these changing dynamics, whether companies are absorbing the cost of tariffs or passing them on to consumers, and what resilience looks like for investors in markets shaped by volatility and transformation.
equity markets, European equities, asian equities, stock market, stocks, value stocks, growth stocks, investing opportunities
Sources: Bloomberg, June 3, 4 &, May 26 2025; Ferrari supercar demand in US remains ‘hot’ despite higher price, Financial Times; Ferrari says it will raise prices by 10% on some models to offset auto tariffs, CNBC; Siemens Earnings Release Q2 2025; Analysis by BlackRock Fundamental Equities, May 2025; UN Projections World Population 2015
Written disclosures in each podcast platform and each episode description:
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener.
Reference to the names of each company mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies.
For full disclosures go to Blackrock.com/corporate/compliance/bid-disclosures
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<<TRANSCRIPT>>
Oscar Pulido: Equity markets across Europe and Asia are changing. The regions are navigating a complex mix of geopolitical shifts, technological disruption, and evolving investor sentiment. Following our last episode on US Equities with Carrie King, we're expanding the conversation globally to understand how these dynamics are playing out beyond American shores.
Welcome to The Bid where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido.
Coming up, I'm joined by Helen Jewel, chief Investment Officer for fundamental equities in EMEA. Belinda Boa, head of Active Investments for Asia Pacific at BlackRock. Together they'll unpack how equity markets across Europe and Asia are responding to these changing dynamics, whether companies are absorbing the cost of tariffs or passing them on to consumers and what resilience looks like for investors in market shaped by volatility and transformation.
Helen and Belinda, thank you so much for joining us on The Bid.
Helen Jewell: Great to be here. Thank you for having us.
Belinda Boa: Thank you so much for having us both here today. Thank you.
Oscar Pulido: Belinda, thank you so much for joining us all the way from Singapore. It's great to get your expertise from you being on the ground in Asia. we've talked a lot about, global equity markets and the volatility since Liberation Day in early April. But the impact of that is very far reaching. And so, I'd love to hear your views on how is it impacting the equity markets in Asia and how are companies navigating this?
Belinda Boa: Well Thanks Oscar. Look, tariffs are going to remain a key theme for our markets this year. and so, for the remainder of the year, that's something that we're focused on. It clearly is going to have a negative impact on growth for most of the economies in this part of the world.
But I would say especially for the countries which are export, reliant. What we've seen up until now is that it's incredibly hard to predict the outcome of these tariffs. And I would say even on a country-by-country basis, it's going to be almost impossible to know where the outcome lands. But we do know some things.
First of all, we know that it's likely to take longer, and so I expect there'll be some volatility over the coming months as the windows for these pauses, come to an end. Secondly, we know that there are going to be certain sectors that are more impacted than others. Sectors like steel, autos, electronics, they're going to be more impacted.
And then of course, we all know that China is going to remain at the front and center of this tariff war. So how are companies actually dealing with it? What are we seeing? Not really that much difference from what's been happening over the last couple of years. Companies are rethinking their strategies and they're trying to build more resilience in their supply chains.
Asia has a very big competitive advantage when it comes to goods production, and we do expect to see more companies moving their production locally and regionally, but also to new markets going forward. The other thing that we're seeing actually is companies using the free trade agreements that exist. I expect we should see more of those and far more collaboration across the region, as companies are looking to rewire their supply chains.
So even though tariffs I think are negative for this part of the world, they are going to have an impact on growth. They are driving uncertainty. There are opportunities. We need to look for those new markets. We need to look for sectors that are perhaps tariff exempt, like pharma. And then we need to look at companies that are able to adapt very quickly to this changing trade, regime.
Oscar Pulido: Helen staying on the topic of tariffs and, the impact on companies around the world. I'd like to now bring the lens over to Europe, and what has been the impact on European companies. I know for example, that companies like Nestle have said that they are able to absorb the impact a little bit better, and I think some of that is because they have a lot of production already in the U.S. Is the Nestle example unique or is that a common theme across European companies?
Helen Jewell: It is very stock specific, but let's start with the top line first. European outperformance in 2025 has been very strong. That's been 8% year to date, or even 19% if you look at that in dollar terms. So, at an index level, Europe is coping very well with the impact of tariffs. However, it is stock specific and even within sectors you've got different companies doing different things.
So, for example, Ferrari for some of its models, they are able to increase prices by 10% to offset those tariffs. And the sales and profits in Q1 were able to absorb some of the nervousness that has been seen. But there were other companies in the luxury space that increased prices a lot during the COVID years, and now they're saying they simply can't do it anymore. They can't increase the prices to offset those tariff impacts, and they are the ones that are going to be more impacted by tariffs.
Industrials is another area that we're seeing dispersion. There are companies like Siemens Energy that recently raised full year guidance because although there are some tariff impacts, they are more than offset by growth in long-term themes like their data center businesses. But there are other industrial companies that are much more closely tied to what is going on in the microeconomic cycle, and they are far more likely to feel the impact of reduced trade and slower economic growth as a result of tariffs.
We also have to be conscious of the weaker dollar, and the impact of the weaker dollar on European company margins, particularly for European exporters. Some of those companies have cited that weaker dollar as something that might put a small dent in what they're able to deliver going forward.
So, what we're able to do in our equities business is look stock by stock to find those companies that can cope with that uncertainty. We look for companies with good quality, strong management teams, strong pricing power, who are able to navigate what we are seeing in the market in terms of volatility and pick up market share.
Oscar Pulido: You gave a number of specific stock examples and even sector examples and the takeaway, I guess for me is that it's very nuanced in terms of how European companies are navigating this period of higher tariffs. And you also touched on the start to the year that European equities have had. What's driving that performance and do you think it can continue?
Helen Jewell: So, let's start with a bit of honesty, Oscar. Some of that is a bit of a reversal from what we saw in Q4 of 2024, where the US was up by 3% and Europe was down two and a half percent. So, some of it is a reversal of that, but there are more concrete reasons for the momentum we've seen in the market.
First off, a lot of the companies that have domestic revenues have led the way. So, for example, European banks and defense companies. Now these companies are of course less impacted by tariffs, and they are also benefiting from some structural shifts that we are seeing. Particularly, of course, the announcements by the German government to spend 1 trillion Euros on defense and infrastructure. The DAX alone is up 20% plus this year, and this spending and the impact of this pro-growth agenda in Europe is a major source of returns, not just now, but for years to come as well. So that is key.
There are other reasons for the rally as well. A potential peace deal in Ukraine and a moderate level of Chinese stimulus all support the European companies. On the other hand, the quality global, more exporting companies that we have here in Europe have lagged a little bit and they are starting to rebound. So, they very much could support the next leg of European leadership from here.
Oscar Pulido: Right, so Europe, there are companies that are benefiting more from some of the domestic policies and decisions that are being made by the German government, for example, and then there are companies that are more global that are more impacted by what's going on from a tariff policy but are navigating it case by case basis.
Belinda, if I could come back to you, we talk a lot about AI as one of the mega forces talk to us a little bit about how that opportunity set differs from that of the US companies that are invested in this AI theme, and maybe what are some of the opportunities outside of tech and AI that you see in APAC?
Belinda Boa: As Helen said, there are, concrete reasons for the momentum that we're seeing in Europe. I believe the concrete reasons for the momentum that we're seeing in the AI trade in Asia. But how is it different? Well, when you look at the AI ecosystem in the US in particular, it's very concentrated.
What Asia brings is diversification. Not just regional diversification, but actually also diversification for currency exposure- which right now is actually particularly important given we've seen the weakness in the dollar. So, if you want to access the AI ecosystem, you can find trades in Taiwan, in Korea. All of those countries offer diversification, and I think that's going to be absolutely key going forward.
Now outside of AI, what do we think is interesting? Still Japan. I know I spoke about a year ago on Japan, we still think that story is interesting. Growth remains untrained and if you look into the growth number, you'll see that actually the domestic demand is expanding much, much faster. inflation is still ticking up and that's driving higher real wages. And of course, that means that we're seeing strength in the consumer as well. But we think they're going to be two key drivers of returns in Japan.
The first one is the corporate reform story. In fact, that continues, it's still intact. And in 2024 we saw share buybacks double from 2023 and we think that's going to continue this year too. And then secondly, we should look at the valuations of Japan. It is very cheap versus its developed market peers. It's lagged in performance. We actually think the market is going to reward companies that are seeing corporate reform and while their earnings unfold, our focus is on the domestic demand sectors.
And then outside of Japan, now we're starting to see actually some signs of recovery in India. We also saw the RBI move last week, so monetary easing, which is easier financial conditions. Inflation has come down, and as we see the government, both public and private CapEx start to increase, that should have a positive impact and boost growth in the market.
What is particularly interesting in light of this conversation around tariffs is that India is a domestic market. It exports to the US only 2.2% of its GDP, so it's likely to be far more resilient as a market than some of our other markets in the region. But I would say one word of caution is you absolutely need to be selective. In India, there are still parts of the market, which are very expensive.
Helen Jewell: And Helen, outside of AI, when we think about European equities, are there other themes? I think you've alluded to some of these like banks and defense companies, but what are some of the other big themes that we should be thinking about?
As you say, we've mentioned defense, but another part of the German spend is in infrastructure. And infrastructure stocks are really important at the moment. They are resilient. They're not impacted by tariffs. By their own nature they are very domestically focused, and they've also got a real earnings growth that is linked to the megaforces, not just like AI, but also the energy transition. So, infrastructure stocks are really important.
We've talked about banks a little bit, but I would like to talk about them a little bit more. Because historically, there've been very cyclical names, but actually what they've been doing recently has been behaving much more defensively and we still see that there is potentially further to go within the banks than we've already seen. Why? Firstly, they return capital to shareholders. Up to 25% of capital is being returned to shareholders by buybacks and dividends in the next few years. Secondly, they are benefiting from strong corporate positions and strong consumer positions, and that is very beneficial for the banks. And thirdly, they have structurally changed a lot since the financial crisis when they were required to have very strong capital basis be selective within them, but European banks still have further to run.
And a couple of other areas, gold equities. The gold price may have run a long way, but the equities have actually lagged a little bit in how they've responded. And we think that they can be very profitable, very high cash returns, cash generative companies and their costs are also lower at the moment due to oil prices.
And one other, industrials. We touched on this one a little bit, but it's a really interesting way of playing the AI theme, as I mentioned already, because European industrial capabilities are across that AI infrastructure stack, also they've pulled back quite a lot because of nervousness on tariff concerns, providing a really interesting buying opportunity in high quality names in the industrial sector.
Oscar Pulido: And Helen, you've touched on sectors, but we're sitting here in London and so I have to ask you about the UK which has been a market that you've actually highlighted in previous episodes as an interesting opportunity set, perhaps a little bit more insulated from some of the trade policy headlines that we've seen this year. what's your view on the UK?
Helen Jewell: Thank you for asking me, Oscar, because as you know, I do get very excited about the UK. It is an index that continues to do well because it is showing how resilient it can be and how from a trade beta perspective, it isn't as exposed to those tariff concerns. It's very services driven, it's very defensive driven. And on top of that, it is also a high yielding index. The FTSE 100 dividend yield is around 4% compared to the S&P, which is around 1.5%. It's also very cheap, 13 times for the index versus the S&P at 23, and the stocks at close to 15. So high income, looking good from a valuation perspective, and it's ripe for active stock picking. You've got great companies across different sectors, both in the defensive space, in the retail space, and also data names as well. So finally, we're seeing investors take another look at the UK because of all those reasons.
Oscar Pulido: We've talked to a couple of your colleagues recently, Tony DeSpirito, Carrie King, and they've said a lot of the same things around being selective, and that there is more breadth in the market more sectors, the sort of participating in the opportunity set. and it sounds like you're talking about some of that as well in Europe.
Belinda Boa: Helen and Belinda, you're both, experienced investors who have been through periods of market volatility and ups and downs. Belinda, in Asia volatility is, also very prevalent. it has been this year; it has been for many years. What's your counsel to investors? what do you tell them about how to manage those ups and downs? Look, volatility in our markets is actually a benefit, it creates opportunities, but this volatility that we've recently experienced is pretty unusual because, as I said before, it's incredibly difficult to predict the outcome of these tariff negotiations. So, I would say to manage this going forward, we don't really want to try and predict that. But really what we want to do is use this volatility, especially for being more tactical, being more active.
Secondly, we also know that the markets react far more to negative and positive news. And that was exactly what happened this time. So, we've seen some pretty big drawdowns, and that I think is an opportunity for us to stick with our high conviction views and use those drawdowns as better entry points into the market.
And then the third thing I think is interesting is diversification. So, this is a conversation, or at least a topic in finance 1 0 1, that everybody's always spoken about. But actually, over the last 10 years or so, given U.S. exceptionalism, you haven't needed diversification. I think that comes back.
In this environment, we're faced with far more global uncertainty. It's going to impact economies across the world. It's going to impact asset classes, and therefore, I think diversification is going to be absolutely key going forward.
So, as Helen said, Europe offers different opportunities, different themes, different markets. I think Asia, given the diversification that we have across this region, for the same reasons will massively benefit from the diversification trade.
Oscar Pulido: A common theme that I'm, hearing as I listen to both of you is, we talk about equities as this monolith sometimes as an asset class, but when you dig into specific countries, specific sectors and specific companies, you see that the opportunity set really varies. Belinda, when you think about the APAC region, and also Helen, when you think about the European region, what are you both seeing in terms of how these markets have evolved over the last year, and what are you seeing in terms of 2025 and beyond?
Belinda Boa: Look, our markets they evolve incredibly quickly, the market dynamics change in this part of the world, but I want to try and maybe call out three themes that I think have already started to play out, and I think will have A number of years still.
The first is obviously the rewiring of these supply chains. What we are seeing is a very big, a massive decoupling of trade between the US and China, but actually at the same time, exports into Europe and to Asia are increasing from China. So, we think that's going to continue. and of course that provides opportunities, in these markets and markets globally.
The second is just in technology. This part of the world has incredibly rich tech talent pool. At the same time, it's infrastructure ready. In other words, we have billions of mobile phone users today, and they will really accelerate the adoption of things like consumer AI databases or applications. We are seeing a lot of funding support for technology companies in the region. Whether it's emerging companies or established companies, they are able to get capital for their R&D and also for their CapEx. Where actually, they're new to the sort of cap spend that we've seen in the us so we think that should accelerate from here.
And then the third theme, which I think we sometimes forget, is just the growth of the consumer base. So, Asia is currently home to 55% of the world's global consumers. By 2030, just the three countries of China, India, and Indonesia will increase that by 830 million. And then if you think about the fact that actually we're seeing rising income in some of these countries, that is going to be a huge consumer, fast growing market going forward, which again, I think provides big opportunities, investment opportunities into 2025 and beyond.
Oscar Pulido: And Helen, what about you? What, when you think about the last year and how the opportunity set has evolved and what 2025 has in store, and then beyond what should we be thinking about for European equities?
Helen Jewell: Definitely the key thing from European equities perspective is thinking about these global exporting names. Yes, Europe has done very well, but so much of that has been driven by the domestic names that we've seen by the banks, by the defense names. We have some really good companies within Europe that are global exporters.
40% of European revenues are within Europe, but that means 60% are outside of Europe. And year to date, it's been about those companies that have that 40% exposure. I do think the rest of the year is going to be about the companies that are more globally producing, and we are going to find investors as they've diversified their portfolios, revisit those names.
And as both Tony and Carrie have said, what this volatility in the market gives us is opportunities for active stock pickers, where you see those names that have pulled back because of tariff concerns, but actually they are very strong global exposed companies who are exposed to AI themes, who are exposed to energy transition themes, and now is the time to buy them when they're at really interesting valuations.
Oscar Pulido: Well, we do take The Bid on the road from time to time and being in London this week and hearing from you, Helen, as you're living and breathing European equities day to day. And Belinda, thank you again, for dialing in from Singapore. Again, you're living and breathing the Asia Pacific Equity story day to day.
Sounds like there's great opportunities in, both of these regions, and we appreciate you sharing that expertise with us here on The Bid. Thank you for joining us.
Helen Jewell: Great to be here. Thank you, Oscar. Thank you, Belinda.
Belinda Boa: Thank you. Thanks Oscar. Thanks Helen.
Oscar Pulido: Thanks for listening to this episode of The Bid. If you've enjoyed this episode, go back and check out our last two episodes with Carrie King on US Equities, and Tony DeSpirito on stock picking during volatility. And subscribe to The Bid wherever you get your podcasts.
<<THEME MUSIC>>
Spoken disclosures at end of each episode:
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener.
For full disclosures go to Blackrock.com/corporate/compliance/bid-disclosures
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