China CITIC Bank International (CNCBI) released its January investment monthly report, stating that global stock markets delivered stellar performance in 2025, and the market was concerned whether this can be replicated in 2026. Although US stock valuations are high, above-estimate earnings growth supports US stocks notching new highs; the ECB's consecutive interest rate cuts, along with increased defense infrastructure investment by Germany and France, boosted European stock valuations, with some European stocks outperforming US stocks; a weak US dollar bolstered Asian stock markets, with South Korean stocks benefiting from AI and corporate reforms, leading global performance; Chinese and Hong Kong tech stocks also regained foreign attention, supported by domestic demand policies, making financial markets vibrant, CNCBI noted.

However, entering 2026, the market faces greater uncertainty. Monetary policies of global central banks may diverge, with potential interest rate hikes by the central banks of Australia, New Zealand, Canada, and Japan, while rate cuts in parts of Europe and Asia may slacken; the US midterm elections and the Fed Chair's succession add political variables; potential trade protection policies, if escalated, could lead to supply chain restructuring; if the AI boom does not match earnings growth, a bubble adjustment may occur; if the US dollar strengthens due to the resilience of the US economy, it will suppress EM performance.

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CNCBI stated that these factors could add fuel to market volatility in 2026, making it difficult for a single region or asset class to stand alone. Therefore, a diversified and flexible strategy should be adopted in asset allocation, with deployment across regions and sectors, combining growth assets (such as AI supply chains) with defensive assets (such as high-yield stocks) to effectively address risks and seize opportunities.

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