Top Questions from our Clients - October 2026

The “Top Questions from our Clients” publication is a monthly periodical that posits the most important questions, answers, and portfolio implications curated from across different regions. The September edition addresses the below topics:

• Question 1: Could a slower pace of AI development reshape public and private markets? A slower but safer pace of frontier AI development could increase public market volatility in AI infrastructure and make private market funding and valuations more selective. But as already committed investment is still huge, while adoption and inference demand accelerate, investment should still be elevated and the AI theme remains well supported. We favour profitable, diversified AI beneficiaries and selective private market exposure for complementary returns and diversification
• Question 2: Are renewed inflation risks a bigger threat than weaker growth? Yes, but inflation should not stall GDP growth or earnings, as both are supported by AI investment and fiscal support. However, elevated oil prices amid Middle East tensions could keep inflation sticky, causing central banks to exercise some caution. Despite higher bond-market volatility and rate uncertainty, we remain risk-on, with equity overweights in the US, South Africa, Japan, Hong Kong, Singapore and South Korea
• Question 3: What are the key risks from higher bond yields and tighter monetary policy? US 10-year yields above 5 per cent could keep financing costs elevated, impacting growth, corporate profits and equity valuations, while forcing some governments to cut back spending. We are watching credit spreads, leveraged borrowers and emerging-market outflows for signs of stress, but for now, these are benign. We also think markets have priced in excessive Fed tightening and favour high-quality credit at current levels
• Question 4: What do France’s upcoming budget and elections mean for markets? France’s large fiscal deficit will make deficit reduction challenging, while political uncertainty around the 2027 budget and elections could keep pressure on markets. We expect a modest budget deal limiting the deficit to 5.6 per cent of GDP, with OAT-Bund spreads consolidating around 100 bps. We remain mildly underweight French equities, neutral on European sovereign bonds and close our underweight on EUR
• Question 5: How are Middle East conflict and closer Canada-EU ties shaping the US midterms? The Middle East conflict keeps energy costs, inflation and affordability at the centre of the midterm debate, while closer Canada-EU ties can affect tariffs, North American supply chains and economic security. While we manage the expected mild election-related volatility, we note that stocks tend to rebound after the elections. We stay focused on capturing earnings and structural trends, maintaining our US overweight
• Question 6: What could trigger the next breakout in equity markets? AI remains the key engine of optimism, with broadening earnings growth, a resilient global economy, re-industrialisation, energy security and rising capex supporting an upside breakout. On the downside, a disorderly rise in bond yields, persistent inflation, oil-price spikes or disappointment over AI profitability could shift risk appetite. We remain overweight global equities, favouring US, Japanese and North Asian stocks with sector diversification