Market Views
2026 Investment Outlook: Keep it Turning
The 2026 Outlook marks a transition, an innovation led era driven by AI investment and strategic industrial policies.
The cycle keeps turning: a transition, not a downturn
2026 will be a year of transition as the global economy adjusts to a regime of “controlled disorder”. AI-driven capex, industrial policy shifts, greater business resilience to tariffs and likely monetary easing should sustain activity and extend the cycle further.
2026 Outlook: Keep It Turning
6 Investment Themes
Diversifying in an era of controlled disorder - a multipolar world reshaped by a tech revolution and fiscal divergence calls for selective risk-taking and increased diversification in FX, gold, and real assets.
Thinking global: equities beyond the tech race - concentration and valuation risks call for a global, diversified search for the winners in this transformative era.
Powering sustainable growth - AI and tech transformation are driving rising energy demand opening opportunities in climate-focused equities, sustainable infrastructure, and green bonds.
Bonds in the new policy order - Rising US debt and a weaker dollar boost demand for diversification—favouring European fixed income and US investment‑grade credit.
The European journey continues - reforms, defence, infrastructure, and strategic autonomy policies are reshaping the macro financial ecosystem, unlocking opportunities in euro corporate credit, small and mid-caps.
Shifting blocks in Emerging Markets - Growth premia and expected Fed cuts should support EM opportunities amid shifting geopolitical equilibria.
5 Key Convictions
2026 will be a year of transition as the global economy adjusts to a regime of “controlled disorder”. AI-driven capex, industrial policy shifts, greater business resilience to tariffs and likely monetary easing should sustain activity and extend the cycle further. Investors will have to weigh equity concentration and valuation risks, rising public debt, structural geopolitical frictions, and sticky inflation from reshoring and the energy transition. Global GDP growth is set to moderate at 3% in 2026 but remain resilient.
“Controlled disorder”, where governments and businesses seek to maintain trade and investment flows, will redefine opportunities at a global level. Our base case for 2026 is mildly pro-risk, supporting equities and investment grade credit. With significant risk stemming from vulnerabilities and valuation excesses, portfolios should combine growth exposure with hedges — gold, selected currencies (JPY, EUR), and inflation-linked instruments — and a greater but selective allocation to private markets. Private credit and infrastructure are in the spotlight to improve income and inflation resilience, and to benefit from structural themes such as electrification, reshoring, AI and robust demand for private capital, particularly in Europe.
The tech capex cycle remains central, but the tech theme is broadening beyond the US to China, Taiwan, India, Europe and Japan. Concentration risk in US mega caps and the possibility of US exceptionalism fading argue for geographic and sector diversification. We favour combining AI exposure with defensive and cyclical themes: financials and industrials set to benefit from higher investment, defence names tied to security spending, and green transition stocks linked to electrification and grids.
Policy choices will drive markets. US debt is unprecedentedly high, which adds risks to the Fed’s independence at a time when inflation is still above target. This balance of forces should keep US yields range-bound, favouring a tactical duration stance and inflation-protection. In 2026, European bonds remain a key call for global investors, with a focus on peripheral bonds and UK Gilts. In credit, we like euro investment grade, with solid fundamentals and are cautious on US high yield, which is exposed to regional banks and is consumer dependent. We believe the USD will continue to weaken, but the journey will not be linear.
Emerging Markets and Europe are areas where short-term opportunities meet long-term themes. The EM rally has room to continue into 2026: a weaker dollar, potential Fed cuts, and the EM growth edge support EM bonds for income and selective EM equities. Europe’s appeal should increase throughout the year as reforms combined with defence and infrastructure spending turn into tangible opportunities, particularly in euro credit and small- and mid-cap equities (with a focus on domestic trends and compelling valuations).
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2026 Investment Outlook
A new regime calls for a new mindset
Controlled Disorder’ with room for accidents
