Core Insights - Morgan Asset Management has released its "2026 Long-Term Capital Market Assumptions" report, marking the 30th consecutive year of publication, maintaining a steady outlook for asset returns despite global market volatility [1] - The report forecasts a 7.7% annualized return for Chinese A-shares in USD over the next 10-15 years, driven by economic resilience, stronger shareholder return policies, and potential valuation upside [1] Group 1: Long-Term Return Projections - The long-term return outlook for Chinese A-shares is positive, with an expected annualized return of 7.7% in USD over the next 10-15 years [1] - Key drivers for this optimistic outlook include the resilience of economic growth, profit growth, and the gradual clarification of risk factors [1] - Enhanced shareholder return policies, such as encouraging share buybacks and strengthening cash dividends, are expected to support long-term returns for A-shares [1] Group 2: Asset Allocation Strategies - Incorporating alternative assets into investment portfolios has become an effective way to enhance returns, reduce volatility, and significantly improve the Sharpe Ratio [2] - The global public fund market remains optimistic about long-term return prospects, supported by corporate profit resilience and technological innovation [2] - Notable governance reforms in East Asian markets, including China and South Korea, are improving capital returns by aligning corporate strategies with shareholder interests [2]

Core Insights - The global insurance industry, managing $23 trillion in assets, is planning to increase allocations to private markets as a strategy to smooth long-term returns [1] - A survey of 463 insurance executives revealed that 93% expect to increase private asset holdings in the next 12 months, while only 3% anticipate a decrease [1] - Investment-grade private credit, including infrastructure debt and private bonds, remains the most favored asset class among investors [1] Group 1 - Insurance companies have increasingly embraced alternative assets, with private equity firms acquiring insurance companies driving growth in private credit, raising concerns among lawmakers about potential risks in the $1.7 trillion market [4] - Executives in the insurance industry are currently prioritizing the diversification and low volatility potential of private assets over merely seeking higher returns [4] - Liquidity is the primary concern for insurance executives when selecting private assets [4] Group 2 - The interest in private assets is seen as a long-term structural shift rather than a trend driven by low interest rates, according to BlackRock's global insurance strategist Mark Erikson [5] - Despite significant investments in private credit by large insurance companies, smaller firms are also beginning to increase their allocations to alternative assets [4] - Following the prolonged low interest rate environment since the 2008 financial crisis, insurance companies have turned to private markets for yield, and recent interest rate hikes have not led to a reduction in private asset allocations [4]

Market Overview - Global risk assets are showing significant differentiation under the dual narrative of "tariffs + interest rate cuts" [1] - Emerging markets are outperforming developed markets, with the South Korean Composite Index leading with a 33.28% increase [1] - The Hang Seng Index and Germany's DAX follow with increases of 24.14% and 19.77%, respectively [1] - The US stock market, represented by the Nasdaq and S&P 500, has seen increases of 8.32% and 7.10% [1] - A-shares in China have also performed well, with the Shanghai Composite Index and Shenzhen Component Index rising by 7.93% and 6.65% [1] Bond Market - Chinese government bond yields have shown a stable trend, with the 10-year yield fluctuating between approximately 1.66% and 1.75% [1] - In contrast, the US 10-year Treasury yield has decreased from 4.37% in early April to 4.22% by August 5, indicating rising expectations for interest rate cuts [1] Currency Market - The US dollar has begun to decline, with the dollar index dropping from 103.46 in March to 98.76 by August 5, a significant decrease [1] - The USD/CNY exchange rate is stable around 7.18, while the USD/JPY has depreciated to 147.18 [1] - The USD has appreciated against the Euro, with the exchange rate at 0.86 [1] Alternative Assets - Gold has performed exceptionally well, with the London spot gold price rising from approximately $3000/oz at the beginning of the year to $3375.30/oz by August 5, a 25.49% increase [2] - The oil market is under pressure, with ICE Brent crude oil down by 9.32% year-to-date [2] Family Office Trends - Global family offices are adjusting their risk tolerance and return expectations due to increasing geopolitical tensions and economic uncertainties [2][3] - Domestic family offices prioritize "preservation of value," shifting from "outpacing inflation" to "not losing is gaining" [3] - Overseas family offices are more open to single-digit returns in the current market environment [3] Asset Allocation - According to UBS's latest report, family offices plan to reduce cash holdings to only 6% by 2025, while increasing investments in alternative assets, particularly private debt [4] - There is a notable increase in the allocation to fixed income and cash-like assets, as well as a rise in consultations regarding family trusts and insurance products [4] - Family offices are extending their due diligence periods for private equity investments, focusing more on cash flow and dividend terms [4] Regional Asset Distribution - Family office wealth is primarily concentrated in North America and Western Europe, with 80% allocated to developed market stocks and bonds [6] - The allocation to North America is projected to be 53% in 2025, a slight increase from the previous year [6] - There is a gradual shift in investment focus, with some family offices reallocating from the US to European markets [6] Investment Opportunities - There is a growing interest in the Greater China region, with 19% of global family offices planning to increase investments there, up 3 percentage points from 2024 [7] - Future investment directions are expected to focus on emerging technologies, including pharmaceuticals, healthcare, electrification, and artificial intelligence [7] - Domestic family offices are increasingly looking overseas for high returns, with a notable rise in interest towards regions like Singapore, Hong Kong, and emerging markets [8]

Market Performance - Global risk assets are showing significant differentiation under the dual narrative of "tariffs + interest rate cuts" [1] - Emerging markets are outperforming developed markets, with the South Korean Composite Index leading with a 33.28% increase [1] - The Hang Seng Index and Germany's DAX have increased by 24.14% and 19.77% respectively, while US indices like Nasdaq and S&P 500 have risen by 8.32% and 7.10% [1] - A-shares have also performed well, with the Shanghai Composite Index and Shenzhen Component Index rising by 7.93% and 6.65% respectively [1] - The healthcare sector in Hong Kong has seen a remarkable increase of 83.25% [1] Bond Market - Chinese government bond yields have shown a stable trend, with the 10-year yield fluctuating between approximately 1.66% and 1.75% [1] - In contrast, US 10-year Treasury yields have decreased from 4.37% in early April to 4.22% by August 5, indicating rising expectations for interest rate cuts [1] Currency Market - The US dollar has been on a downward trend, with the dollar index falling from 103.46 on March 19 to 98.76 on August 5 [1] - The USD/CNY exchange rate is stable around 7.18, while the USD/JPY has depreciated to 147.18 and the USD/EUR has appreciated to 0.86 [1] Alternative Assets - Gold has performed exceptionally well, with the London spot gold price rising from approximately $3000/oz at the beginning of the year to $3375.30/oz by August 5, marking a 25.49% increase [2] - Conversely, the oil market is under pressure, with ICE Brent crude oil down by 9.32% year-to-date [2] Family Office Trends - Family offices are becoming more conservative in their investment strategies due to increasing geopolitical risks and economic uncertainties [3] - Domestic family offices prioritize "preservation of value," shifting their focus from "beating inflation" to "not losing is gaining" [3] - Overseas family offices are still seeking higher returns, with single-digit growth now being acceptable in the current market environment [3] Asset Allocation - According to UBS's latest report, family offices are reducing cash holdings, with only 6% planned for cash by 2025, while increasing investments in private debt to enhance portfolio returns [4] - There is a notable increase in fixed income and cash-like assets, as well as a rise in consultations for "safety net" tools like family trusts and large deposits [4] - The due diligence period for private equity has lengthened, with stricter requirements for cash flow and dividend terms [4] Global Asset Allocation Shifts - Family offices' wealth is primarily concentrated in North America and Western Europe, with 80% allocated to developed market stocks and bonds [6] - The allocation to North America is projected to be 53% in 2025, a slight increase from the previous year, while the Asia-Pacific region's allocation has decreased to 7% [6] - Some family offices are beginning to adjust their risk exposure to the US market, with a shift of stock allocations from the US to Europe [6] Investment Focus in Asia-Pacific - There is a growing interest in the Greater China region, with 19% of global family offices planning to increase investments there, up 3 percentage points from 2024 [7] - Future investment directions are expected to focus on emerging technologies, including pharmaceuticals, healthcare, electrification, and artificial intelligence [7] Overseas Investment Trends - Domestic family offices are increasingly seeking high returns overseas, with a consensus on diversifying market risks [8] - There is a noticeable increase in asset allocation demand towards Hong Kong and emerging regions [8] - Clients are also paying attention to cross-border tax implications related to overseas investments [8]