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1. Global growth surprises to the upside: the global economy is in a Goldilocks phase of stronger growth and modest inflation, supported by low and falling central bank rates, and fiscal spending. The US economy is likely to “run hot” up to November’s mid-term elections.
2. Long-term bond yields rise, led by Japan: since May, Japanese 10-year JGB yields have risen by 1% to 2.3% due to persistent negative real rates and plans for expansive government spending. A positive result for the ruling LDP on 8 February’s snap election should boost Japanese stocks but could put pressure on bond yields and the yen.
3. Emerging markets are back! Emerging markets are attracting inflows from underweight investors, backed by lower rates, tech + commodity exposure, attractive valuations and improving earnings momentum. We are Positive on emerging market stocks and bonds, particularly Latin America and Chinese A-shares.
4. Metals still shine in January: despite recent volatility, precious metals gained 21% and industrial metals 5% over the month, on strong global demand and restricted supply as well as rising geopolitical tensions. We stay Positive on gold and strategic industrial metals like copper.
5. Infrastructure in focus: given growing needs for electricity and given higher government spending. We are positive on Infrastructure as part of a diversified portfolio. Consider an exposure to public listed infrastructure funds/ETFs and private infrastructure funds (higher long-term returns but limited liquidity).
For more than a decade, global financial markets have been built around a set of assumptions that gradually turned into near-dogmas: the dominance of US assets, a structurally strong dollar, the primacy of growth stocks and an environment of abundant liquidity. As 2026 begins, mounting signals suggest a clear break with this established framework.
For investors, the question is no longer whether to invest, but how to invest in an environment that has been profoundly reshaped by the return of economic cycles, greater geographical diversification and the rising importance of real assets.
This new phase calls for a reassessment of financial allocation through a renewed macroeconomic lens. Expansionary fiscal policies, diverging monetary paths, persistent geopolitical tensions and a rebalancing of global economic power are once again becoming central drivers of investment decisions. This analysis aims to provide a coherent framework for navigating this changing landscape.
1. An exceptionally supportive global macroeconomic environment
Stronger-than-expected global growth
Contrary to long-standing expectations of a slowdown, global growth has shown remarkable resilience. Both developed and emerging economies are benefiting from substantial fiscal support, while the gradual normalisation of monetary policies has helped stabilise economic activity rather than undermine it.
This rare synchronisation across regions is restoring visibility on medium-term growth trajectories and providing a solid foundation for financial markets, particularly in an environment where confidence had been eroded by successive shocks over recent years.
Inflation under control: a key condition for investing in risk assets
One of the defining features of the current cycle is the gradual easing of inflationary pressures. Slowing wage growth, stabilising rental markets and easing energy prices are creating conditions in which growth can persist without overheating.
In this context, investing in risk assets regains macroeconomic legitimacy. Both institutional investors and private wealth holders can once again consider equities, credit and selected real assets within a more stable and predictable framework.
Accommodative monetary policies remain in place
Central banks, led by the US Federal Reserve, now have greater room for manoeuvre to ease financial conditions without compromising their credibility. Expectations of interest-rate cuts are mechanically supporting financial investments across asset classes, from equities to credit and real assets. This environment is fostering a renewed global appetite for risk, reinforcing the foundations of a more constructive investment cycle.
2. A shift in global leadership: emerging markets, Japan and cyclical assets
The resurgence of emerging markets
Stronger-than-expected global growth A historic shift in the hierarchy of financial markets
After more than a decade of relative underperformance, emerging markets are undergoing a major turnaround. For the first time in several years, their annual performance has surpassed that of US large-cap equities, signalling a structural shift in the hierarchy of global financial markets. This inflection point marks the end of a long phase dominated by US assets and opens the door to a broader redistribution of performance drivers across regions.
Structural drivers supporting long-term investment
This revival rests on solid foundations. Many emerging economies benefit from favourable demographic trends, expanding working-age populations and the rapid growth of their middle classes. These dynamics support domestic consumption and improve long-term growth visibility. In this context, investing in emerging markets once again represents a coherent strategic thesis rather than a short-term tactical allocation driven solely by valuation gaps.
Valuations, currencies and earnings momentum
Attractive valuations are reinforced by a clear improvement in earnings momentum. In addition, the prospect of emerging-market currencies appreciating against the US dollar further enhances the appeal of these regions for long-term equity investors. This combination of valuation, growth and currency dynamics supports sustained investment, notably through specialised investment funds designed to capture these structural trends.
3. Japan at the heart of global financial market reconfiguration
Rising Japanese interest rates and global implications
Japan occupies a distinctive position in the current cycle. The rise in government bond yields to levels not seen since the late 1990s reflects a profound shift in the domestic monetary regime, driven by persistent inflationary pressures and changing policy priorities.
This evolution is influencing international capital flows and forcing new allocation decisions between bonds and equities within global portfolios.
Contagion risks remain contained for global financial markets
Despite upward pressure on Japanese yields, the risk of broader contagion remains limited. The predominantly domestic ownership of Japanese government debt acts as a natural buffer against spillover effects.
For international investors, Japan appears less as a source of systemic risk than as a market offering selective opportunities within a rebalanced global allocation.
4. Towards renewed structural weakness in the US dollar
A dollar overvalued relative to global financial fundamentals
Long regarded as an unquestioned safe haven, the US dollar now appears overvalued relative to its long-term fundamentals. Persistent deviations from purchasing power parity estimates, combined with increasing divergence in monetary policies, point to a gradual weakening of the dollar over time.
This shift represents a significant change for international investors accustomed to relying on dollar strength as a structural source of performance.
Heightened volatility in foreign exchange markets
This transition phase is accompanied by heightened volatility in currency markets. Managing currency exposure therefore becomes an increasingly important dimension of portfolio construction.
At the same time, these movements encourage a reassessment of the regions in which equity investment becomes structurally more attractive when viewed through a currency-adjusted lens.
Currency scenarios and implications for financial investments
Over a twelve-month horizon, projections point to an appreciation of the euro against the US dollar and further strengthening of the yen. These trends materially affect expected returns on international assets and reinforce the case for rigorous geographical diversification within financial portfolios.
5. Commodities and metals: a cornerstone of tomorrow’s financial allocation
Gold and precious metals as defensive financial investments
In an environment marked by persistent geopolitical uncertainty, gold retains a central role in portfolios. Its function as a store of value and a diversification tool makes it a natural pillar of long-term financial investment, particularly when confidence in fiat currencies is challenged.
Industrial metals and global electrification
Beyond precious metals, industrial metals benefit from powerful structural momentum. Electrification, the energy transition and digitalisation are driving sustained demand for key inputs across multiple sectors.Investors can gain exposure to these themes through sector equities, specialised ETFs or thematic investment funds focused on long-term industrial transformation.
6. Infrastructure: a discreet but strategic foundation of financial investment
Infrastructure as a distinct asset class
Infrastructure is increasingly recognised as a core asset class within diversified portfolios. Its ability to generate stable cash flows, its low correlation with listed markets and its inflation-protection characteristics significantly enhance its long-term attractiveness.
Three long-term structural drivers
Digitalisation, electrification and renewed public investment are fuelling a powerful infrastructure investment cycle. These forces are supporting the expansion of specialised investment funds while also creating tangible opportunities to invest in listed infrastructure assets.
Exposure strategies depending on investor profile
Listed infrastructure offers a liquid and accessible solution for a broad range of investors. Unlisted strategies, by contrast, are better suited to those with longer investment horizons seeking potentially higher returns within their overall financial allocation.
7. Commodities and metals: a cornerstone of tomorrow’s financial allocation
Summary of core investment convictions
The year 2026 opens with a clearly defined cyclical bias. Emerging markets, Japan and selected industrial sectors appear as the primary beneficiaries of the ongoing macroeconomic reconfiguration.
This approach implies a disciplined rebalancing of financial investments away from overvalued regions and segments, in favour of assets more closely aligned with the new growth cycle.
The central role of real assets in portfolios
Commodities, infrastructure and cyclical sectors have become essential pillars of long-term investment strategies. In a fragmented world shaped by persistent geopolitical and macroeconomic shocks, these assets provide both diversification and structural exposure to durable trends.
8. Investing in 2026 with a renewed reading of financial markets
The new cycle requires moving beyond the reflexes inherited from the previous decade. The gradual end of dollar dominance, the resurgence of emerging markets and the rising importance of real assets are reshaping global financial markets.
For experienced investors, the objective is not to anticipate short-term market movements, but to construct coherent, diversified and resilient financial portfolios capable of navigating this new regime over the long term.
9. Our main investment themes for 2026
1. A clear return of cyclicality across financial markets
The combination of resilient global growth, easing inflation and supportive monetary conditions favours a renewed cyclical bias. Assets linked to economic momentum are once again positioned as key drivers of performance.
2. The gradual end of US exceptionalism and a structurally strong dollar
After a prolonged phase of outperformance, US assets are entering a period of normalisation, while the dollar appears structurally overvalued. This environment strengthens the case for greater geographical and currency diversification.
3. Emerging markets regaining their role as a key performance engine
Emerging markets benefit from favourable demographics, improving earnings momentum and attractive valuations. This alignment of factors restores their position as a core source of long-term performance.
4. Japan as a strategic allocation in global portfolio rebalancing
Rising domestic yields and shifting monetary dynamics are improving the relative attractiveness of Japanese assets. Japan now represents a strategic allocation within global y diversified portfolios.
5. Real assets at the core of long-term financial investment
Commodities, strategic metals and infrastructure provide exposure to structural trends such as electrification and digitalisation. They also enhance diversification and resilience in an increasingly fragmented global environment.
6. Infrastructure as a source of resilience and sustainable returns
Infrastructure offers stable cash flows, inflation protection and low correlation with traditional markets. Strong demand driven by energy, data and transport needs supports its long-term return potential.
7. A more global, disciplined and selective investment approach
The 2026 environment calls for disciplined allocation, greater selectivity and genuine global diversification. Balancing financial and real assets becomes central to building resilient portfolios.
Edmund Shing, PhD
Global Chief Investment Officera
