Investment Monthly: A bullish outlook still requires strategic diversification

Key takeaways

While we remain optimistic about 2026, supported by strong AI adoption and a favourable earnings outlook, the recent geopolitical tensions in Venezuela highlight the continued importance of managing market volatility through multi-asset strategies. Beyond the US and Technology, we are diversifying by broadening our exposure across Asia and other sectors, by investing in gold and diversifying our currency exposure.

We remain overweight on US equities, including IT and Communications, while diversifying into Industrials, Utilities and Financials to capture a broadening range of opportunities. Although we do not expect further Fed rate cuts, bonds are important for income generation in portfolios. We prefer US investment grade credit with medium duration.

China’s Central Economic Work Conference (CEWC) 2025 reaffirmed policy priorities centred on innovation-driven structural growth, industrial upgrading and a revival in domestic demand through consumption and investment. With a significant EPS growth projection for 2026 (12.5%) and undemanding valuations at 12.3x forward P/E with a ROE of 11.2%, we remain positive on Chinese equities. Our investment approach balances exposure to AI themes and innovation leaders, with high-dividend, quality companies that benefit from both cyclical drivers and structural policy tailwinds.

https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/a-bullish-outlook-still-requires-strategic-diversification/

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Publish Date: Fri, 09 Jan 2026, 08:04 AM

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