Investing in tomorrow – Opportunities and risks

The global economy is in constant flux. Trade flows are shifting, regions are gaining or losing influence, and new technologies are also reshaping the economic map. 2025 has been challenging in some respects, but many local equity indices did deliver very good performance. Given the positive macro environment, we expect 2026 to be another constructive year, albeit with continuing market volatility. Although we anticipate a reduction in some uncertainties, it will definitely not be a time for complacency – especially as global trade relations are far from settled. The continued rise of artificial intelligence (AI) may open up new growth opportunities, which should encourage companies to increase their investment activity, potentially giving fresh impetus to both private and public consumption. 

The US administration’s tariffs agenda appears to have now been largely implemented. While the disorientation that followed the declaration of “Liberation Day” in early April still lingers globally and domestically, most US trading partners have managed to significantly reduce initial steep tariff hikes through renegotiation. Overall, markets seem to have priced in the effects of the new environment, with overall tariffs still considerably higher than in January 2025 when the current administration began its tenure.

US growth is likely to be supported by the continuation and introduction of extensive tax relief measures, as well as increased spending on security and defence under the One Big Beautiful Bill Act. The three interest rate cuts expected from the Federal Reserve by the end of 2026 and planned deregulation in the banking sector should also further improve the investment and consumption environment. What makes these government stimuli remarkable is that they come at a time when the US economy is not in recession but is already growing robustly. The US also appears to be close to full employment. Despite the long-term risks such an environment may pose – including inflationary pressures and rising public debt – we expect fiscal and monetary measures to deliver noticeable economic support in 2026.

We also anticipate that policy will deliver a cyclical impulse in Europe, for example due to Germany’s EUR500bn special fund. Planned investments, particularly in infrastructure and climate neutrality, could trigger a short-term upswing. To achieve sustainably higher growth, however, improving domestic economic flexibility remains crucial to foster entrepreneurial initiatives and create an investment climate that enhances productivity. In my view, urgent action is still needed here. 

We maintain a broadly constructive outlook for equity markets in 2026. This will be partly due to strong demand for new AI-based applications, which should continue to drive substantial corporate investment flows. Beneficiaries will not only include US “Big Tech” but also a wide range of sectors – construction (thanks to new data centres), utilities (via higher electricity demand) and industrial and basic materials along the supply chain. Our earnings growth forecasts for companies across all major regions are therefore firmly in double-digit territory. 

As outlined in our annual outlook themes, investors should also consider potential risks in equity markets. In the area of highly energy-intensive AI applications, for instance, a global power shortage could dampen investor expectations for progress. Not every stock will be a winner in 2026, and short-term corrections at index level remain possible.

Investors should therefore continue to act with discipline. This means focusing on fundamentals rather than chasing perceived trends, while utilising the broad spectrum of investment opportunities. Diversification remains key. Alongside equities, corporate bonds may be attractive – depending on your risk appetite, both investment-grade and high-yield segments. Gold and some non-traditional investments, such as in private equity or infrastructure, also merit consideration. We explore these in detail in the “Alternative Investments” section of this annual outlook.

Overall, we expect a dynamic year for capital markets in 2026 with numerous compelling opportunities. The central question will be whether constructive forecasts can hold up amid a backdrop of economic and geopolitical challenges. Further disruptions to global trade flows or a renewed escalation of tariff tensions could, for example, temporarily pressure corporate earnings and increase market volatility.

In a complex and uncertain environment, investors would therefore be well advised to actively manage risks. This will enable them to respond to market developments in line with their personal investment strategy. Staying invested with a defined strategic asset allocation will be key, as attempts to perfectly time market entry and exit points can often result in missing the best-performing days and weeks.

I hope you find our annual outlook insightful and full of stimulating ideas for your portfolio. We are always available to review and discuss these ideas and look forward to hearing from you.

Christian Nolting 

Global CIO