May 2026
11 May 2026
Q1. What is driving global equities to new highs despite macro uncertainty?
The strong recent performance is driven by hopes of a sustained ceasefire and a resilient economy. Strong AI-related news flow supports investors’ confidence that the huge investment in structural priorities (AI, energy security and defence) will keep the economy going and create plenty of opportunities. We maintain our mild overweight to global equities, favouring the US, mainland China, South Korea, Hong Kong SAR China and Singapore. Sectorally, we like Materials, Energy, Industrials, Technology, Communications and Utilities.
Q2. Where are the short-term and structural opportunities in Asia amid the conflict?
Asian equities have been pressured by higher oil prices, particularly across energy-importing economies, but markets are increasingly pricing that peak uncertainty has passed. Some selective rebounds are therefore emerging. Structural drivers – AI, policy support and governance reforms – remain intact in the region. We favour a barbell approach balancing innovation with income and remain overweight on mainland China, Hong Kong SAR China, Singapore and South Korea.
Q3. Could energy-driven inflation force central banks to hike rates?
Rising energy prices are creating inflationary pressures, but weaker growth and anchored long-term inflation expectations should limit broad renewed tightening. We expect hikes from only select central banks, notably the BoJ and RBA, while the major ones like the Fed, ECB and BoE should remain on hold. Bond investors should expect to ‘clip coupons’ rather than seeing big price gains. We therefore like medium- to long-duration IG credit and tactically favour inflation-linked gilts as portfolio hedges.
Q4. Is the market underestimating Middle East supply-chain risks for tech and semis?
We see potential supply-chain risks for tech and semis through helium and LNG exposure. But near-term disruption appears manageable given low helium cost exposure, existing inventories, and alternative sourcing. Risks rise mainly if shortages persist or the conflict materially escalates. We maintain our full overweight in US IT and continue to favour opportunities linked to our “Asia’s Data Centre Boom” theme.
Q5. Will the recent USD rebound last, or will the weakening trend resume?
The recent USD rebound reflects safe-haven demand during geopolitical stress, but we view it as cyclical rather than structural. Over time, broader drivers still point to gradual USD weakness. We remain neutral on the dollar, favouring selective currencies including AUD, SGD and MXN, while using gold as a diversifier.
Q6. What is the outlook for commodities, and does gold remain a relevant hedge?
We remain constructive on metals and commodities, though opportunities are increasingly selective rather than broad-based. Copper and aluminum benefit from energy transition demand and constrained supply, while platinum and rhodium also look supported. We prefer gold over silver as it remains a relevant hedge amid geopolitical uncertainty, fiscal pressures and continued central bank buying.
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