At the start of 2025, the Oracle investment team looked to the year ahead and decided to have a crack at predicting the future.
We have revisited the 2025 Predictions for the year ahead to see how we performed; our results were interesting.
The IPO market is revived in 2025
After the frenzied $600 billion in fresh capital that was raised worldwide in 2021, initial capital fell to approximately $170bn, $120bn, and 100bn in 2022, 2023, and 2024, respectively. Our thinking was that a revival in investor confidence in the market would provide more companies with the confidence to list.
According to consulting firm EY, in the 9 months to September 2025, the global IPO market raised US$110bn. While the data is yet to come for 2024, speaking anecdotally based on my perception of the last 3 months, it is unlikely that you would characterise 2025 as having seen a “revived IPO market”.
The US intervenes in the electricity market as data demand surges
The thinking behind this prediction was the rapid rise in the use of data centres and the immense power required to enable artificial intelligence applications. The AI theme has not let up, and the hyperscalers and AI large language model providers continue to spend hundreds of billions of dollars on infrastructure, but did this lead to the US intervening in the energy market? Well, I thought it was only appropriate to ask the poster child of the AI movement, ChatGPT. To summarise:
“Yes — in 2025, the United States has taken several actions that count as intervention in energy markets”.
The reasons cited for the intervention included the economic burden to consumers of high energy prices, inadequate domestic energy supply, national energy security concerns, and, of course, increasing demand from technology, datacentres, and the electrification of everything.
The founder of Nuclear of Australia becomes a special adviser to the next federal Minister of Business, Energy and Industrial Strategy.
It did not happen – the Labour Party won the Federal Election and Chris Bowen continues to favour a 100% renewable energy policy with complete disregard for an integrated resource plan to secure a high-quality energy supply at affordable prices. Nuclear remains taboo in a country with vast reserves of uranium, the only clean energy source to provide 24/7/365 baseload electricity.
Anyone who has watched Bowen’s career over the past twenty years, especially his underwhelming performances as a minister, could hardly say that diplomacy is his strong suit. He is graceless. In the meantime, electricity prices in Australia continue to rise, a real tragedy for a country with an abundance of coal and gas.
Consolidation in the world of accounting software.
Very little happened in the world of accounting software as far as consolidation goes; fair to say the global accounting landscape continues to be influenced by significant regulatory changes and compliance requirements. Governments and international bodies are continuously updating standards to enhance transparency and accountability.
AI-powered automation is a key theme in the world of accounting software, with streamlining of tasks such as purchasing management, variance analysis and integrated workflows.
To conclude, there was no merger between Xero and Sage; each company was plotting its own destiny.
2025 – Finally Small Caps will thrive
The small-cap manager on our team, Jack, finally has something to cheer about. After years of underperformance, the ASX Small Ords index has finally outperformed the big brother ASX200 index. In the race for the best returns of the year, it’s not even close between the two. As of writing on the 9th of December, and not withstanding a disaster to end the year, the Small Ords has outperformed the ASX 200 by 12.34%! The Small Ords have had a great year so far, returning 21.51%, compared to the ASX 200 returning 9.17%.
I highlighted three catalysts to start the year, as to why I thought small companies would outperform large. They have all played out as predicted.
The banks! The banks surged in 2024, driving the ASX 200’s returns. Commonwealth Bank led the charge last year, but with the CBA share price flat year-to-date and other big names like CSL down -34% for YTD, the ASX 200 has squeezed out an average return of 9.17%.
New Zealand will rebound
The cash rate in New Zealand declined by 1.50% in 2025. This differs from Australia, which declined by 0.75%. The large cut in rates is due to the New Zealand economy still struggling. Three of the last five GDP quarterly reports have reported negative growth, with the latest in June being negative. The Kiwi unemployment rate is also over 5%.
The Reserve Bank of NZ cut rates by 50 basis points in October and again by 25 basis points in November as its economy continues to languish. With their cash rate now at a low 2.25%, we could start to see recovery in 2026 as Kiwis’ personal budgets are under less pressure and a lower NZD increases imports, e.g., Tourism.
ASX/200 to provide double-digit total returns for the third year in a row.
For 2025, we predicted double-digit gains for the ASX200. As of this writing, the total return was 9.8%. Shall we call this a win, a loss or neutral? Given that we are only in the second week of December, I am tempted to call it a win (hello! We also need a win sometime.). However broadly, we have been correct on the broader trend, and now for the third year in a row. The important point was that consensus was bearish, and we were bullish over the last three years. Despite all the threats of rate hikes, tariffs and geopolitical uncertainty, the market delivered once again.
So, what's next for 2026? Given that we are now in a mature bull market, large gains are unlikely. But we are still bullish and forecasting high single-digit gains in ASX200 for 2026. And unlike the previous years, banks are unlikely to be the star performers. This is assuming there is no interest rate hike cycle. If there is no rate hike cycle, then tech should grow strong EPS, and late-stage growth like healthcare should also rebound. If there is a rate hike, then financials should do very well. Overall, we expect a happy and prosperous 2026.
There were some interesting results from our predictions, but overall, we were pleased looking back at our predictions.
Later in the month, we will be making our predictions for 2026, so watch this space!
Written by the Oracle Investment Management team.
Important information – Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.