Macroeconomic Strategy Team
4 April 2023
Events of the past quarter have strengthened our conviction on several of the team’s core economic views.
In our view, the macro backdrop will get worse before it gets better in the current global economic cycle, and investors should expect to experience higher and longer bouts of volatility through the first half of 2023.
At this point, we believe it’s crucial to reassess how we should be thinking about the Fed’s approach to policy making, especially in the context of the second biggest bank failure in U.S. history which has raised doubts about the health of the U.S. banking system.
Semiconductors poised for long-term growth amid AI boom
The global semiconductor industry remains strong – arguably the most robust we have seen in over three decades. This strength is supported by cutting-edge innovation, rising revenues and robust capital spending. While risks remain, the outlook for 2026 appears constructive, with demand for artificial intelligence (AI) applications showing few signs of slowing. Beyond AI, the non-AI markets could be poised for positive revisions as cyclical recovery gains traction after several years of consolidation.
2026 Outlook Series: Global Equity Diversified Income
Equity market leadership could broaden in 2026 beyond mega-cap technology, creating opportunities across sectors and regions. Global economic growth is expected to stabilize, supported by fiscal spending and easing monetary policy in key markets. Europe and select Asian economies offer attractive valuations and improving fundamentals, complementing US resilience. Value and income-focused strategies may regain prominence alongside growth, supported by quality fundamentals. The Global Equity Diversified Income strategy is positioned for diversification across geographies, sectors, and styles, aiming for income and capital appreciation.
2026 Outlook: Clearer picture, better growth
This year’s outlook spotlights a world in flux – U.S. stimulus, Europe’s rebound, China’s policy pivots, and Japan’s innovation surge all shape a landscape full of both opportunities and challenges.
Risk Diversification
There is no free lunch. But Risk Diversification comes close in investing. A diversified portfolio was shown to optimize returns with lower volatility in the long run.
Latest asset allocation views for Asia Q1 2026
Three key global themes for the first quarter: Liquidity and stimulus set the stage for 2026; AI remains a structural growth driver; Accelerating growth may favour diversification
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