Executive Summary
Global equity markets, as measured by MSCI World Index, ended November with a 0.2% gain. Mixed performance of equity markets was driven by valuation concerns around AI-related stocks and U.S. monetary policy expectations. As we step into 2026, almost all top global asset managers agree that AI is the overarching investment theme for the year. However, concentration risk in S&P 500 and recent volatility of US policy warrants a need for diversification of portfolios geographically. Developed Market equities, particularly Europe (driven by strong earnings growth expectations) and Japan (boosted by the new Prime Minister's reflationary policies), present opportunities in 2026. Emerging Market Equities are expected to benefit from a weakening US dollar, lower Fed rate and attractive valuations. Fixed income presents a mixed picture, where US Treasuries carry a risk due to rising fiscal concerns, while the weakening of the US dollar and relatively disciplined fiscal and monetary policies make some local currency emerging market bonds increasingly attractive. Private markets offer distinct opportunities, including attractive yields in private debt (though caution is needed due to pockets of distress), growing exit opportunities for private equity, and potential gains in macro and event-driven hedge fund strategies. Data centers and energy transition are driving infrastructure, and there are opportunities within real estate focusing on industrials and logistics. Gold is expected to continue its role as a key hedge against inflation and policy volatility. Bitcoin will be supported by institutional adoption and supportive regulations. However, oil's upside is limited by rising supply, unless there are any disruptions.
