“Markets have been shaped by rapidly shifting narratives  from artificial intelligence disruption and fiscal deficit concerns to recent corrections in tech and gold and conflict in the Middle East,” Willem Sels, global chief investment officer at HSBC Private Bank and Premier Wealth, said in his report.

“Yet, when we look at the next six months, the fundamental backdrop remains constructive, with global growth led by the US and Asia, resilient corporate earnings, and innovation supporting productivity and margins,” he continued.

“In this environment, resilient multi-asset portfolios have performed well, and this performance should continue in the upcoming six months too,” he added. Sels remains overweight in global equities, with a preference for the US and Asia, where growth remains strong and innovation and earnings momentum continue to create opportunities.

He noted that investors are actively seeking to diversify away from the US, but highlighted that the US market proved its resilience when the Iran conflict started, thanks to its energy sector and the dominant tech sector, which is largely insensitive to oil prices.

Sels believes that Asia offers compelling diversification and innovation opportunities. Japan benefits from corporate governance reform and shareholder return initiatives, while South Korea’s semiconductor exposure positions it well within the global AI supply chain. He remains overweight in select markets including mainland China, Hong Kong, Japan, Singapore, and South Korea, while maintaining a cautious stance in areas facing structural governance concerns.

Within Europe, he sees more selective opportunities. Growth has stabilised, inflation has moved closer to target, and policy easing is more advanced than in the US. However, the region faces greater sensitivity to global trade developments, the conflict in the Middle East and currency dynamics. The UK’s defensive tilt and commodity exposure provide a potential hedge in volatile periods, though it is not a domestic growth story. Overall, the bank thinks Europe offers valuation support but lacks the earnings acceleration seen in the US and parts of Asia.

While AI remains a key structural driver, Sels sees cyclical opportunities across sectors, apart from IT, such as industrials, financials, communication services and materials.

Sels also favours income generation through investment-grade and emerging market bonds. He maintains active currency diversification, and complements public markets holding with private markets. He is adding to alternatives including hedge funds, private equity, private credit, infrastructure and multi-asset strategies to manage volatility and broaden opportunity sets – continuing to diversify its diversifiers. Sels is also overweight in gold as a tail-risk hedge.

He maintains a preference for growth-style stocks and companies with pricing power and exposure to structural growth themes, particularly in the US and Asia. The bank also recommends its high net worth and ultra-high net worth clients to consider selective allocations to hedge funds and private markets to broaden access to the opportunity set.

The bank’s four priorities for the second quarter of 2026 include:

1)    Complement AI exposure with cyclical opportunities: Maintain exposure to AI structural growth drivers, notably semiconductors and electricity infrastructure, while broadening participation beyond IT by adding cyclical sectors such as industrials, financials, communication services and materials. 

2)    Unleash the power of income: With fewer rate cuts expected, income strategies focusing on investment-grade and emerging market bonds can support returns and help reduce portfolio volatility.

3)    Manage volatility with alternatives and multi-asset strategies: Complement public markets with hedge funds, private markets and global multi-asset strategies to access innovation in private companies, benefit from dispersion across winners and losers, and diversify foreign exchange exposure as policy paths diverge.

4)    Tap into Asia’s innovation and income: Asia can help strengthen and diversify US-heavy portfolios while providing access to long-term growth and resilient income opportunities.

HSBC's stance is shared by others. London-headquartered remains positive about the outlook for emerging markets which outperformed developed ones in 2025, driven by a weaker US dollar, stronger relative earnings revisions and improving return on equity (ROE).  Samy Chaar, chief economist, CIO Switzerland at Swiss private bank , also told this news service this month that he will remain invested in Asia, which makes up 70 per cent of emerging markets, despite the conflict. See here.

“The year-to-date volatility of gold has demonstrated that no single diversifier is perfect, so we continue to diversify our diversifiers across sectors, geographies and asset classes,” Sels said.

“The combined opportunities in Asia’s innovation and fixed income sectors continue to stand out, and our barbell approach to these two drivers has performed well in recent months,” Patrick Ho, chief investment officer, North Asia at HSBC Private Bank and Premier Wealth, added. “This positioning balances the region’s compelling growth prospect with meaningful income potential from high-quality dividend-paying equities, further supported by ongoing corporate governance reforms, which add to the diversification effects in a resilient portfolio.”