AllianzGI says selective asset picking key amid global uncertainty

Allianz Global Investors (AllianzGI) has assessed that selective asset picking is key to maintaining portfolio performance amid global economic and geopolitical uncertainty, even as the world economy continues to show resilience in the second half of 2026. The firm’s Chief Investment Officer (CIO) team explained that global uncertainty is still influenced by persistently high oil prices, inflation that remains above target in most developed countries, and the potential for increased volatility ahead of the US midterm elections. “After being disrupted by US tariff policies, geopolitical conditions in the Middle East are now beginning to show stabilisation. However, a number of factors still need to be watched by investors, including energy prices, inflation, and political dynamics in the US which could affect market sentiment,” the AllianzGI CIO team said in an official statement received in Jakarta on Thursday. The assessment was delivered in AllianzGI’s third-quarter 2026 House View report titled ‘Withstanding the Shock’, which highlights global market prospects and investment strategies for facing various economic and geopolitical risks. According to AllianzGI, its base case scenario still points to a resilient global economy. However, the market currently reflects a reduction in risk rather than the complete disappearance of risk. This global economic resilience is supported by continued investment in artificial intelligence (AI), still-supportive financial conditions, and the resilience of household and business consumption. The firm believes that an investment approach that merely follows general market movements is no longer sufficient to generate optimal returns. The ability to actively select countries, sectors, and investment instruments is considered a key factor in maintaining portfolio performance amid changing market conditions. “For investors, what matters is not just the direction of market movements, but also the range of possible outcomes. The risk of persistently high inflation and the outlook for interest rates are directing investor attention towards assets that offer value, income, and quality characteristics,” the CIO team stated. In equity markets, AllianzGI believes that value stocks still have attractive prospects, especially in a market still driven by AI developments. Besides providing diversification benefits, the firm assesses that this segment could potentially gain support from a higher-for-longer interest rate environment, while also reflecting a renewed investor focus on company fundamentals. The company also noted that AI infrastructure development is beginning to shift from the model training stage towards wider-scale implementation, thereby opening up more diverse investment opportunities, including in the semiconductor, data centre, and other supporting technology sectors. In fixed income, AllianzGI believes that active management of government bond exposure and a focus on high-quality credit instruments can help dampen market volatility. The firm also favours investment-grade bonds in the US and Europe over high-yield bonds. “Although geopolitical conditions remain fraught with uncertainty, we maintain a positive view on equity markets, especially from a systematic rather than fundamental perspective, with a preference for US and emerging markets over Europe and Japan,” the AllianzGI CIO team said. In emerging markets, the firm views investment opportunities as remaining attractive but requiring a selective approach, for instance by favouring oil-exporting countries over oil-importing ones. Furthermore, the company expressed a positive view on Peruvian government bonds with a 15-year tenor and Brazilian government bonds with a 10-year tenor in local currency. In addition, AllianzGI remains positive on gold as a diversification instrument amid increasing market attention on central bank independence and the outlook for the US dollar. Commodities with a long position are also still considered a portfolio diversification tool. “In market conditions full of uncertainty, the use of options strategies can enhance portfolio diversification,” the AllianzGI CIO team said.