Global Markets Remain Resilient, Asset Selection Key Amid Uncertainty
Allianz Global Investors (AllianzGI) assesses that the global economy is still showing resilience amid successive geopolitical and global economic pressures. Although there are no signs of significant global economic weakening in the short term, investors are advised to adopt a more selective and active investment strategy to navigate market dynamics in the second half of 2026.
According to AllianzGI’s Chief Investment Officer (CIO) team, global uncertainty is still influenced by several factors, ranging from persistently high oil prices and inflation remaining above target in most developed countries, to the potential for increased volatility ahead of the midterm elections in the United States.
“After being briefly 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 stated in its Q3 2026 House View report.
In this situation, AllianzGI believes that an investment approach relying solely on market beta is no longer sufficient to generate optimal returns. Going forward, the ability of investors to select countries, sectors, and investment instruments will be a primary factor in determining portfolio performance, alongside the ability to adapt to changing market conditions.
From an asset class perspective, AllianzGI sees attractive prospects for value equities, particularly in a market still driven by developments in Artificial Intelligence. This segment not only offers diversification benefits but also has the potential to be supported by a higher-for-longer interest rate environment, reflecting a shift in investor focus back to corporate fundamentals. “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 the US and emerging markets over Europe and Japan,” the team added.
In fixed income, AllianzGI is observing a significant rise in core government bond yields. Under these conditions, the firm believes that active management of government bond exposure and a focus on high-quality credit instruments can help mitigate market volatility. The team also expressed optimism regarding long-dated Peruvian government bonds with a 15-year tenor and Brazilian government bonds with a 10-year tenor in local currency.
Furthermore, AllianzGI remains optimistic about gold as a diversification instrument amid growing market attention on central bank independence and the outlook for the US dollar. The firm also maintains a positive view on commodities with a long position as a key diversification tool within portfolios. “In market conditions full of uncertainty, the use of options strategies can enhance portfolio diversification,” the AllianzGI CIO team concluded.