Monthly Comment - March 2025

March 2025

Macro at a Glance 

On March 18, 2025, the Bundestag voted for a budget reform that put an end to Germany’s strict 0.35% GDP debt policy. With over two-thirds of parliament in favor, Europe’s largest economy decided to boost its budget by €1 trillion for national infrastructure, potentially revitalizing a country that has endured an economic contraction for the past two years. This reform also pushes defense spending beyond previous limits. ⚔️ 

This shift marks a significant turning point in German economic doctrine—one that could bolster the political prospects of Friedrich Merz, rumored to be the next chancellor. European defense contractors and German industrial giants appear poised to benefit the most. However, the ripple effects on neighboring nations remain uncertain, given that a rise in Eurozone interest rates—linked to Germany’s increased debt issuance—could strain other countries’ financing costs. 

Meanwhile, March brought a substantial sell-off in US equities. The S&P 500 dropped by over 5.75% amid renewed stagflation fears. President Trump heightened trade tensions, provoking retaliatory measures from affected nations. Simultaneously, inflation overshot expectations, with core PCE for February climbing by 0.5%. Concerns about persistent price pressures rattled the markets, especially since the Federal Reserve kept rates at 4.25%–4.50%, signaling no immediate rate cuts. The CNN Fear & Greed Index spent most of the month in extreme fear territory.  

On March 19, 2025, the Bank of Japan maintained its policy rate, as widely predicted, despite ongoing inflation pressures. This cautious stance reflects concerns over the potential fallout from evolving U.S. tariffs. Most BOJ analysts still expect a rate increase in June or July, adhering to a measured pace of roughly one hike every six months until reaching a terminal rate. This gradual approach indicates the central bank’s priority: economic stability in the face of external uncertainties. 

One Sector, One Insight 

Basic Materials and Energy ⚡ 

In March 2025, TotalEnergies (TTE) officially announced the restart of its $20 billion LNG project in Mozambique, marking a pivotal moment for Africa’s energy industry. The initiative had been stalled since 2021 due to security challenges, but it now moves forward with renewed optimism. TotalEnergies’ share price climbed 3.2% on the news. The Mozambique LNG Project originates from major natural gas discoveries in 2010, with TotalEnergies holding a 26.5% operating stake. Additional momentum arrived as the U.S. Export-Import Bank re 

approved a loan of nearly $5 billion, critical for overcoming financing roadblocks that had long hindered the project’s revival. 

Consumption and General Public Services

On March 6, 2025, Walgreens Boots Alliance (WBA) — one of the world’s largest retail pharmacy chains, with over 12,000 stores in the U.S. and Europe — agreed to a $13 billion buyout by private equity firm Sycamore Partners. The deal, which includes a 35-day “go-shop” period, follows years of mounting competitive pressures from online rivals and tightening margins. Sycamore intends to streamline operations by focusing on the U.S. market, implementing cost controls, and spinning off the Boots UK segment to restore profitability. 

Financial Services 

On March 20, 2025, the Swiss Federal Council unveiled plans to tighten capital requirements for systemically important banks in the wake of UBS (UBSG) acquiring Credit Suisse. The Swiss government aims to mitigate systemic threats by significantly increasing equity mandates, a move UBS warns might undermine its global competitiveness. CEO Sergio Ermotti cautioned that the bank might relocate parts of its operations if regulation becomes too restrictive. However, by March 26, UBS hinted at shrinking its investment bank to comply with the proposed rules while protecting its core business. 

Healthcare  

On March 11, 2025, Danish biotech Zealand Pharma (ZEAL) struck a landmark deal with Roche (ROG) to co-develop Petrelintide, a pioneering obesity therapy. The arrangement could be worth up to $5.3 billion, underscoring Roche’s drive to broaden its footprint in the lucrative weight-loss market. Investors reacted favorably: Roche shares rose 3.6%, while Zealand Pharma soared an impressive 38%. 

Industrials ⚙️ 

The electric vehicle industry experienced turbulent swings throughout March 2025, highlighted by BYD (1211) surpassing Tesla (TSLA) as the top EV producer. BYD’s annual revenues shot up by 29% to $107 billion—outpacing Tesla’s $98 billion. Analysts point to BYD’s diversified approach (hybrid and electric) versus Tesla’s exclusively electric strategy. Since January 2025, BYD shares have leapt 41%, while Tesla’s have slipped 31%. The market narrative now questions whether Tesla can remain competitive against BYD’s rapid expansion. 

Technology and Network Equipment  

After shelving a takeover last year due to looming regulatory obstacles, Alphabet (GOOG) confirmed on March 15, 2025, that it will acquire cybersecurity startup Wiz for $32 billion. Wiz collaborates with cloud platforms such as AWS and Microsoft Azure. Alphabet shares dipped almost 3% post-announcement, further extending a 13% slide since January. With $23.47 billion in cash and equivalents on December 31, Alphabet may need external funding to close this blockbuster deal. 

The Stock of the Month  

Novo Nordisk recorded its steepest monthly drop since 2002, sliding over 22% in March 2025. Sluggish U.S. prescription growth for its widely touted weight loss medication Wegovy, plus growing competition and tighter regulatory scrutiny, led to the slump. The fall even caused Novo Nordisk to lose its crown as Europe’s largest listed company to SAP. 

Brief Outlook for April 2025

As we turn the page to April 2025, market participants will watch closely for any shifts in central bank policies—particularly from the Fed and BOJ—as inflation remains a critical concern. Germany’s newly expanded budget may ripple through the Eurozone bond market, affecting borrowing costs for other nations. Meanwhile, trade tensions fueled by the U.S. administration could continue unsettling global equities. Investors will also keep an eye on corporate earnings releases to gauge the staying power of the economic recovery.

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