Foreign investors are also frequently discussing AI. How do you view the market situation in 2026?

The last day of the Spring Festival holiday has arrived, and the A-shares market remains closed. Discussions on “how to invest this year” and “market outlook for the year” have already returned to investors’ focus.

The reporter has reviewed investment outlooks from multiple institutions including Schroders Investment, Blackstone, Swiss Pictet Asset Management, and UBS Wealth Management for 2026. These cover 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 involving data, electricity, and hardware supply chains; second, on the macro level, growth remains resilient but uneven, with U.S. earnings expectations still solid, yet valuation concentration and policy uncertainties require 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 low-volatility, low-correlation Asian bonds are frequently mentioned.

Looking back at these judgments during the Spring Festival 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 a fully optimistic or pessimistic conclusion, but emphasizing reserving enough defensive space outside of AI and technology-driven growth sectors.

Foreign Perspective on the “Long Bull Mainline” — AI

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

Blackstone sees AI as not only transforming profit paths in the tech sector but also penetrating 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 office takes a more direct view on stock market pricing, noting that the software industry faces ongoing uncertainty under AI disruption. Competitive landscapes may be reshaped, raising questions about growth and profitability of certain companies. Recently, software stocks have experienced significant pullbacks, 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 refresh 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 terms of overall allocation, UBS maintains a neutral stance on the U.S. IT sector but rates AI themes as “attractive,” emphasizing that AI-related opportunities are not limited to traditional tech indices but are expanding into finance, healthcare, utilities, and other industries.

The macro assumptions provide the backdrop 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 gains, U.S. corporate earnings are projected to grow about 12% in 2026, and their target level for the S&P 500 mid-year and year-end has been raised compared to current levels. This makes the “earnings growth + rate decline” scenario a favored base case for foreign institutions.

Blackstone’s outlook echoes this, listing “resilient 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 pent-up 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 providing relative advantages for private assets.

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 of industry and corporate health: early in the year, U.S. stocks continued their multi-year rally, seen as an exception, with companies enjoying high short-term valuation premiums.

Subsequently, concerns over tariffs, geopolitics, and policy uncertainties quickly intensified, evolving into a view that the U.S. was uninvestable. Market risk pricing for the dollar, U.S. Treasuries, and U.S. stocks became misaligned. During this phase, Pictet reduced U.S. debt holdings and increased U.S. equities, believing that the operational quality of U.S. companies remained intact, 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 to micro-level analysis, reallocating funds into AI, tech hardware, and long-term growth themes.

Under 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, memory, and semiconductor equipment in Taiwan, Korea, and Japan—key parts of the global supply chain—and also considers China’s potential in mining, rare energy, and downstream AI applications.

Cyclical opportunities are more concentrated in financials, defense, and certain commodities. AI and energy transition require substantial and sustained capital formation, with banks and capital markets expected to benefit from regulatory easing. Defense, military, and scarce resource sectors are viewed as directly related to national security, with capital expenditure and order growth likely to be more certain amid increasing geopolitical tensions.

Regionally, Pictet highlights Japan, noting its strategic position in manufacturing supply chains. If Japan’s monetary and fiscal policies further shift toward expansion, it could leverage heavy industry, trading companies, and domestic consumption to become a market worth monitoring in 2026.

Across these narratives, the “long-term bull” theme presented by foreign investors shares a similar outline: 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 less effective. Meanwhile, Asia’s advantages in hardware, exports, and demographics are elevating its role in the AI industry chain and global growth map.

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

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

He notes that current geopolitical and fiscal conditions bear similarities to the Bretton Woods collapse era: monetary systems under pressure, the White House pressuring the Fed to cut rates, and highly concentrated U.S. stocks. However, differences include the much greater global fiscal fragility today, more pronounced U.S. political polarization and wealth inequality, China’s industrial strength and fiscal resources far exceeding the Soviet Union at that time, and AI as a new technological driver. Energy structures and oil dependence have also changed significantly.

Against this macro backdrop, Luke believes gold is evolving from a cyclical, rate-sensitive hedge to a “counter-cyclical” structural allocation in portfolios. He suggests gold could reach a structural high only if geopolitical and fiscal risks are substantially resolved or demand is proven to be unsustainable. Currently, neither scenario seems likely in the short term.

Notably, China’s role in this precious metals 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 currencies. Under future sanctions risks and concerns over U.S. debt credibility, this ratio is viewed as low. On equities, gold mining stocks in 2025 had ROIC exceeding the S&P 500, with profit margins improving significantly, yet still trading at a discount to physical gold. Future ROIC could rise above 20%.

Beyond gold, Pictet emphasizes Asian fixed income and local currency assets as safety cushions. Co-head of emerging market corporate bonds Yang Xiaoqiang points out that the more optimistic global growth outlook is concentrated in emerging markets, especially Asia. Through export upgrades from primary commodities to high-tech products, regional trade share has increased from about 46% in the 1990s to roughly 60% today. Under the AI and commodity cycles, Asia’s export advantage is expected to persist.

Furthermore, Asian countries have accumulated large dollar positions—via foreign exchange reserves and bank assets—meaning dollar funds will eventually flow back into dollar-denominated assets. Asian dollar bonds are a key channel. Yang notes that after China’s high-yield real estate debt defaults peaked in recent years, default rates in Asian high-yield bonds have declined, with credit rating upgrades outnumbering downgrades, indicating improving corporate fundamentals. Despite overall narrowing of global credit spreads, current yields make Asian corporate bonds relatively attractive, and lower onshore financing costs plus reduced net supply further support their performance.

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 these bonds back to USD yields similar returns to U.S. Treasuries but with advantages in volatility and portfolio diversification.

(Article source: Cailian Press)