Saxo Bank calls for broader investing strategy in Q3 2025
Saxo Bank promotes diversification
Saxo Bank has published its market outlook for the third quarter of 2025, placing strong emphasis on the urgent need for global diversification in investment portfolios amid extreme concentration in the U.S. stock market.
The outlook, presented from both investor and trader perspectives, highlights growing risks associated with heavy reliance on U.S. mega-cap equities, especially the so-called “Magnificent Seven,” which now comprise 32% of the S&P 500 index.
According to Jacob Hvidberg Falkencrone, Saxo Bank’s Global Head of Investment Strategy, such high levels of concentration pose systemic risks. During periods of market volatility, these widely held stocks are often the first to be sold, amplifying price swings. In response, Saxo Bank is promoting a new strategic approach dubbed the “BABA trade” — “Buy Anything But America.” While not advocating a complete exit from U.S. equities, the bank strongly encourages investors to rebalance their portfolios toward more global diversification.
Regional priorities: Europe, Asia, and emerging markets
The report pays special attention to Europe, where large-scale fiscal stimulus programs — such as Germany’s €500 billion modernization initiative — are underway. Saxo Bank notes that European equities have already outperformed U.S. markets in early 2025, yet the full impact of public investment may still be underpriced.
Japan stands out for its positive corporate governance reforms and strong financial performance, with a recommendation to focus on domestically driven companies. Emerging markets such as India, Brazil, and Indonesia are also showing strong growth potential, particularly in light of the anticipated weakening of the U.S. dollar — a factor that has historically benefited these economies.
China is addressed as a tactical opportunity, with attractive sectors like green energy and electric vehicles. However, the bank advises investors to exercise caution due to ongoing geopolitical and regulatory risks.
Thematic trends and final takeaway
In addition to geographic focus, Saxo Bank identifies two major global themes for Q3: the expanding integration of artificial intelligence across industries and the continued growth of defense spending, particularly in Europe. However, the bank warns that high valuations in the defense sector may already reflect much of the future growth potential.
In conclusion, Saxo Bank reinforces a central message: like in football, success is achieved through teamwork, not just star players. Diversification and strategic thinking are the foundation of a resilient investment portfolio in uncertain times.
Notably, Saxo Bank recently announced the launch of fractional share trading for its clients in Singapore.
