Foreign investors are also frequently mentioning AI. What is your outlook on the market situation in 2026?

Cailian Press, February 23 (Reporter Wu Yuqi) — The last day of the Spring Festival holiday, the A-shares market remains closed, and discussions on “how to invest this year” and “market outlook for the year” have already returned to investors’ focus.

Cailian Press has compiled investment outlooks for 2026 from multiple institutions including Schroders Investment, Blackstone, Swiss Pictet Asset Management, and UBS Wealth Management, covering various areas such as gold and commodities, U.S. stocks and AI themes, private assets, global multi-asset allocation, and Asian fixed income.

From the statements of these institutions, the keywords for 2026 can be summarized into three dimensions: First, AI-driven productivity improvements and technological revolutions are still in their early stages, with a high consensus around long-term tracks related to data, electricity, and hardware supply chains; Second, on the macro level, growth remains resilient but uneven, with U.S. earnings expectations still solid, but valuation concentration and policy uncertainties requiring investors to focus more on diversification and selection; Third, in an environment where interest rates have peaked and are falling, and geopolitical risks are rising, safety cushions in multi-asset portfolios become more important. Gold as a counter-cyclical allocation and Asian bonds with lower volatility and correlations are frequently mentioned.

Looking back at these judgments during the holiday window, it appears that foreign investors prefer to understand 2026 through a “structural opportunity + safety cushion allocation” approach: not simply betting on a single theme, nor easily making fully optimistic or pessimistic conclusions, but emphasizing reserving enough defensive space outside of AI and technology-driven growth sectors.

Foreign Investors’ “Long Bull Main Line” — AI

Among the perspectives of several foreign institutions, the most frequently mentioned keyword is AI. In Blackstone’s 2026 investment outlook, they list AI investment and productivity enhancement as one of the primary trends shaping the current market landscape, emphasizing that data centers, electricity, chips, and connectivity are entering a multi-year capital expenditure cycle. These investments are mainly driven by corporate cash flow rather than high leverage, and are viewed as the foundation for future productivity gains and investment opportunities.

Blackstone believes that AI not only changes the profit paths of the tech sector but also penetrates the broader real economy through private equity, infrastructure, and other channels. Opportunities are not limited to a few leading companies in the public markets.

UBS Wealth Management’s investment director’s office takes a more direct view on stock market pricing, noting that the software industry faces ongoing uncertainty under AI technological impacts, with competitive landscapes potentially rewritten, raising doubts about growth and profitability of some companies. Recently, software stocks have experienced significant declines, which could provide more attractive entry points for long-term value investing.

Meanwhile, UBS believes that the tech hardware sector, represented by smartphone manufacturers, has already fully reflected optimistic expectations due to product replacement cycles. The current 12-month forward P/E ratio is significantly above the 5- and 10-year averages, signaling investors should remain cautious about potential slowdown in subsequent growth.

In terms of overall allocation, UBS holds a neutral stance on the U.S. IT sector but maintains an “attractive” rating on AI themes, emphasizing that AI-related opportunities are not limited to traditional tech indices but are expanding into finance, healthcare, utilities, and other industries.

The macro backdrop provides context for all this. UBS expects the Federal Reserve to cut interest rates twice in 2026, by 25 basis points each time, with monetary and fiscal policies jointly supporting the U.S. economy. With productivity improvements, U.S. corporate earnings are expected to grow about 12% in 2026, and their target level for the S&P 500 in mid-2026 and year-end has been raised compared to current levels. The combination of “earnings growth + declining interest rates” thus becomes a favorable scenario for foreign institutions to bet on.

Blackstone’s outlook echoes this, listing “moderate but uneven growth,” “slowing inflation,” and “declining global capital costs” as three other key trends. They believe that falling borrowing costs and the release of accumulated deal demand are driving a revival in deal activity, especially in private equity, where the number of deals over $1 billion in 2025 nearly doubled year-over-year, with valuation differences giving private assets a relative advantage.

Swiss Pictet Asset Management’s senior multi-asset investment manager Guo Shaoyu reviews the 2025 market narrative, summarizing the year’s emotional shifts from American exceptionalism to the view that the U.S. is an uninvestable market, then back to fundamentals and industry/company health: early in the year, U.S. stocks continued their multi-year rally, enjoying high short-term premiums.

Later, concerns over tariffs, geopolitics, and policy uncertainties quickly fermented, evolving into the view that the U.S. is uninvestable. Market risk pricing for the dollar, U.S. Treasuries, and U.S. stocks became misaligned. During this phase, Pictet reduced holdings of U.S. Treasuries and increased U.S. equities, believing that the operational quality of U.S. companies did not slow down in tandem, and macro-micro mispricings created opportunities.

After mid-2022, as U.S. policy shifted from tariffs to supporting business and tech sectors, and as AI and tech companies’ earnings reports confirmed industry health, the firm shifted its focus from macro to micro, reallocating funds into AI, tech hardware, and long-term growth themes.

Within this framework, Pictet divides its multi-asset investments into three pillars: long-term growth themes, cyclical opportunities, and sustainable stable income. The long-term growth segment focuses on AI-driven supply chains, including wafer foundries, storage, and semiconductor equipment in Taiwan, Korea, and Japan, which are critical in global supply chains, while also paying attention to China’s potential in mining, rare energy, and downstream AI applications.

Cyclical opportunities are more concentrated in financials, defense, and some commodities. AI and energy transition require large, sustained capital formation, and banking and capital markets are expected to find new business opportunities amid regulatory easing. Defense, military, and scarce resources are seen as directly related to national security, with capital expenditure and order growth highly certain amid increasing geopolitical tensions.

Regionally, Pictet highlights Japan, noting its important position in manufacturing supply chains. If Japan’s monetary and fiscal policies further shift toward expansion, it could resonate through heavy industry, trading companies, and domestic consumption, making it a market to watch in 2026.

Across this narrative, the “long bull main line” outlined by foreign investors shares similar contours: the U.S. remains central with AI and earnings cycles as mid-term pillars, but sector and company differentiation is accelerating, making single-index or few large-cap bets insufficient to cover the entire theme; meanwhile, Asia’s advantages in hardware, exports, and demographics elevate its role in the AI industry chain and global growth map.

Seeking “Safety Cushions” in Volatility: Gold and Asian Bonds

In terms of major assets, Schroders senior portfolio manager James Luke emphasizes gold. In 2025, gold prices hit 45 record highs, rising 65%, surpassing the performance of the 2000s bull market, comparable only to early and late 1970s.

He analyzes that current geopolitical and fiscal conditions bear many similarities to the breakdown of the Bretton Woods system: monetary systems under pressure, the White House pressuring the Fed to cut rates, and highly concentrated U.S. stocks. Differences include that today’s global fiscal fragility far exceeds that of the past, with more pronounced U.S. political polarization and wealth inequality. China’s industrial strength and fiscal resources are far beyond the Soviet Union’s capabilities at that time. AI has become a new technological driver, and energy structures and oil intensity have changed significantly.

Against this macro backdrop, Schroders believes gold is evolving from a rate-sensitive cyclical hedge to a “anti-fragile” structural allocation in portfolios. They judge that gold prices could reach a structural high only if two conditions are met: either geopolitical and fiscal risks are substantially resolved, forming a new stable pattern, or demand itself is discredited and saturates. Currently, neither scenario is likely in the short term.

Notably, China’s role in this gold bull market is considered underappreciated. The Chinese central bank’s gold reserves account for about 8% of its assets, with the rest mainly in USD and other foreign currencies. Under future sanctions risks and U.S. debt credibility issues, this ratio is seen as too low. On equities, gold mining stocks in 2025 had ROIC exceeding the S&P 500, and with profit margins improving, they remain discounted relative to gold spot. ROIC could rise above 20% in the future.

Besides gold, Pictet’s safety cushions also include Asian fixed income and local currency assets. Yang Xiaoqiang, co-head of emerging market corporate bonds, notes that the more optimistic global growth outlook is concentrated in emerging markets, with Asia performing best. Asian countries have upgraded exports from primary commodities to high-tech products, with regional trade share rising from about 46% in the 1990s to around 60% now. Under the AI and commodity cycles, Asia’s export advantage is expected to persist.

Furthermore, Asian countries have accumulated large dollar holdings—foreign exchange reserves and bank assets—meaning dollar funds will eventually flow back into dollar-denominated assets. Asian dollar bonds are an important channel for this. Yang emphasizes that after the high-yield real estate debt defaults in China in recent years, default rates in Asian high-yield bonds have fallen significantly, with credit rating upgrades outnumbering downgrades, and corporate fundamentals stabilizing. Although global credit spreads have narrowed overall, at current yield levels, Asian corporate bonds are still considered reasonably valued. Onshore bonds, with lower financing costs and reduced net supply, further support Asian dollar bond performance from a technical perspective.

From a diversification and risk-hedging perspective, Pictet suggests that Asian local currency bonds, especially renminbi bonds, have lower volatility than U.S. Treasuries and lower correlation with global risk assets, offering potential for macro risk hedging and building “new safe assets.” Hedging local currency bonds back to USD yields similar returns to U.S. Treasuries but with advantages in volatility and portfolio diversification.