KEY THEMES & INVESTMENT TAKEAWAYS
Article: https://www.ubs.com/global/en/media/display-page-ndp/en-20251120-year-ahead-2026.html
- Invest in transformational innovation: AI and technology have been key drivers of global equity markets and should fuel further gains in 2026. While being mindful of bubble risks, allocating up to 30% of a diversified equity portfolio to structural trends including AI, longevity, as well as power and resources, is recommended.
- Add to equities: Supportive economic conditions should underpin global equities, which are expected to rise by around 15% by the end of 2026. Solid US growth and accommodative fiscal and monetary policy favor technology, utilities, health care, and banking, with gains likely in the US, China, Japan, and Europe.
- Seek opportunities in China: China’s tech sector stands out as a top global opportunity. Strong liquidity, retail flows, and earnings expected to rise to 37% in 2026, should sustain momentum for Chinese equities. Broader Asian exposure, in particular to India and Singapore, could provide additional benefits for investors seeking diversification, as could emerging markets.
- Favor commodities: Supply constraints, rising demand, geopolitical risks, and long-term trends like the global energy transition should support commodities. Within this asset class, particular opportunities exist in copper, aluminum, and agricultural commodities, while gold serves as a valuable diversifier.
- Seek diversified income: Income-seeking investors should diversify, by blending quality bonds and higher yielding strategies with income-generating equities and structured investments. This should help generate yield and manage risks associated with tight credit spreads and market uncertainties.
- Currency strategy matters: The euro, Australian dollar, and Norwegian krone are preferred over the US dollar, as anticipated US rate cuts may put pressure on the greenback. Financial repression could contribute to increased currency volatility in the future, and high-yielding currencies are poised to benefit as risk appetite broadens in FX markets over the next year.
