At a recent investor summit in Dubai, Jim DeMare, the head of Global Markets at Bank of America, took center stage to shed light on the substantial slowdown in client trading activity that has been observed since the beginning of 2025. This downturn is widely interpreted as a result of uncertainties surrounding the policies of the newly elected government in the United States.

According to DeMare, there has been a notable decline in trading activity compared to the fourth quarter of 2024, with trading frequency in certain sectors plummeting by around 30% since the year's onset. He pointed out that the proposed tariff policies by the new administration have become a focal point of market chatter. Investors are voicing concerns that these potential tariff measures could elevate corporate expenses, exacerbate supply chain pressures, and ultimately filter down to asset prices. The prevailing uncertainty has led many institutions to adopt a wait-and-see approach, choosing to remain on the sidelines until more clarity is provided regarding these policies.

Bank of America stands as a significant player in the U.S. banking landscape, having consistently ramped up its investments in trading operations over recent years. Data reveals that the bank has maintained double-digit growth in its balance sheet across fixed income, foreign exchange, and commodities sectors for three consecutive years. This strategic move has enabled them to claim approximately 5% market share from competitors. After being appointed head of the research division in December 2024, DeMare played a vital role in enhancing the synergy between trading and research, ensuring that the bank maintains robust competitiveness even amid complex market conditions.

Despite a cooling in client activity, DeMare remains optimistic about the department's performance. He mentioned that prior strategic investments in technology systems and talent teams should enable the trading division to sustain its strong performance into the first quarter of 2025. In fact, the bank's trading business achieved a remarkable record of $8.9 billion in revenue in 2024, with fixed-income products accounting for over 60% of this total. Such resilience stands out remarkably in the current market environment.

When discussing regional market analysis, DeMare expressed a keen interest in the investment potential within the Gulf countries. He pointed out that government initiatives over recent years have aggressively pursued economic diversification by attracting global capital through transparent and business-friendly policies. For example, the recent Golden Visa program launched by the UAE and Saudi Arabia's Vision 2030 development plan offer new opportunities for international investors. Bank of America has established its regional headquarters in Dubai, with ambitions to expand its client assets in the Gulf region to $50 billion over the next three years.

Interestingly, the prevailing cautious market sentiment hasn't uniformly impacted all business lines. The bank's third-quarter earnings report revealed a year-over-year increase of 12% in sales and trading revenues, reaching $4.9 billion, driven by an 18% surge in equity business and an 8% rise in fixed-income products. This growth momentum can be partially attributed to increased market volatility stemming from expectations regarding global central bank monetary policies. Brian Moynihan, the bank's CEO, indicated that while revenue remained flat in investment banking due to a slowdown in M&A activity, the continuous expansion of the trading business provided vital support to overall performance.

Looking ahead, DeMare believes the markets will undergo a period of policy digestion. He advises investors to focus on three critical variables: the concrete timetable of infrastructure investment plans proposed by the new government, the pace of monetary policy adjustments by the Federal Reserve, and the evolution of international trade tensions. He cautioned that the potential ripple effects of tariff policies, including global supply chain restructuring and inflationary pressures, would profoundly impact asset allocation strategies.

In terms of risk management, Bank of America has implemented several measures to counter potential fluctuations. The bank has raised the assumed impact of tariffs in stress testing scenarios from 15% in 2024 to 25%, and it has increased its hedging positions in emerging market currency derivatives. DeMare stated that this proactive approach aims to ensure compliance with capital adequacy and liquidity coverage ratios even under extreme conditions.

Despite facing numerous challenges, DeMare remains confident about the long-term market outlook. He noted that as the global economy gradually progresses past the pandemic, structural investment opportunities are beginning to surface. Sectors such as green energy transition, accelerated digitalization, and the demand for healthcare innovation prompted by an aging population are expected to be significant drivers of growth in the coming years. Bank of America has established specialized funds focusing on investments in ESG sectors and technology startups.

Concluding his remarks at the Dubai summit, DeMare reiterated the vital importance of policy transparency. He urged governments worldwide to enhance communication with the market and guide expectations through clear policy frameworks. In his view, this healthy interaction can not only stabilize market confidence but also create favorable conditions for the long-term development of the real economy.

In summary, the current slowdown in client activity at Bank of America can be seen as a result of short-term policy uncertainties and a reflection of institutional investors reassessing market risks. In this complex and fluctuating environment, the bank aims to sustain business resilience through strategic investments and agile adjustments while seizing structural opportunities for continued growth.