Core Viewpoint - The global market is entering a new round of asset allocation competition in 2026, with a focus on broader asset diversification to address uncertainties, following a rare bull market in 2025 where major global indices recorded positive returns, particularly in China and precious metals [2] Macro Environment - The global economy is expected to continue a moderate recovery in 2026, with the U.S. economy likely avoiding a hard landing, characterized by a "weaker appearance but supported by policy" [3] - The Federal Reserve may have room for three more interest rate cuts, contributing to a more accommodative monetary policy that supports risk assets [3] - Enhanced coordination of fiscal and monetary policies among major economies is anticipated, with flexibility in policy direction following previous tightening [3] - Geopolitical risks, including the Russia-Ukraine conflict and Middle East issues, remain unresolved, potentially shifting focus to Latin American countries [3] Asset Allocation - Standard Chartered recommends overweighting equities in the core investment portfolio while maintaining core positions in bonds, as the environment for risk assets is favorable but performance disparities will widen [4] - The U.S. and Asian markets (excluding Japan) are favored for equities, with particular emphasis on the resilience of U.S. stocks due to corporate earnings growth and easing geopolitical risks [4] - India is upgraded to overweight due to improved earnings and strong economic growth, while China is also favored, especially in technology, healthcare, and communications sectors [4] Sector Insights - European (excluding the UK) and Japanese stocks are downgraded to underweight, while technology stocks remain a focal point, shifting the investment logic from long-term narratives to current earnings certainty [5] - In the bond market, government bonds are recommended as a core stabilizer, with a preference for emerging market government bonds benefiting from moderate inflation and dovish monetary policy [5] Currency and Commodities - The dollar is expected to face pressure, with a decline in its structural advantages, while gold is maintained as a core hedging tool, with a mid-term target price of $4,350 per ounce in three months and $4,800 per ounce in twelve months [6] - Gold is viewed as a long-term asset rather than a short-term trading tool, while the oil market is constrained by supply-demand fundamentals, limiting price increases despite geopolitical volatility [6]

Core Viewpoint - Guotai Junan suggests an overweight allocation to risk assets in January due to the Federal Reserve's expected interest rate cuts and balance sheet expansion, which may reduce policy uncertainty and market volatility [1] Group 1: Asset Allocation Recommendations - The recommended allocation for January is 50.00% in equities, 35.00% in bonds, and 15.00% in commodities [1] - For January 2026, the suggested equity allocation is 47.50%, with an overweight in A-shares and Hong Kong stocks (10.00%), and U.S. stocks (17.50%), while underweighting European stocks (2.50%) and Indian stocks (2.50%), and maintaining a standard allocation in Japanese stocks (5.00%) [1] Group 2: Rationale for Equity Allocation - Multiple factors support the performance of Chinese equities, with a recommendation to overweight A/H shares due to the upcoming work conference and the start of the 14th Five-Year Plan, which may lead to broader fiscal deficits and more aggressive policies [1] - The "Goldilocks" scenario is emerging, favoring U.S. stock performance, as the U.S. economy shows resilience despite cooling, with weakening inflation and corporate earnings expectations potentially supporting upward movement in U.S. stocks [1]

Core Viewpoint - The report from Guotai Junan suggests that the Federal Reserve's expected interest rate cut and unexpected expansion of its balance sheet may reduce policy uncertainty and market volatility for investors, indicating potential opportunities in global equities and commodities, with a recommendation to overweight risk assets in January [1] Asset Allocation Recommendations - The suggested asset allocation is as follows: 50.00% in equities, 35.00% in bonds, and 15.00% in commodities [1] - For January 2026, the recommended equity allocation is 47.50%, with specific allocations of 10.00% in A-shares, 10.00% in Hong Kong stocks, 17.50% in U.S. stocks, 2.50% in European stocks, 5.00% in Japanese stocks, and 2.50% in Indian stocks [1] Factors Supporting Equity Performance - Multiple factors are expected to support the performance of Chinese equities, with a recommendation to overweight A/H shares. The upcoming economic work conference and the start of the 14th Five-Year Plan in 2026 are anticipated to lead to further expansion of the fiscal deficit and more proactive economic policies. The Federal Reserve's December interest rate cut and the stable appreciation of the RMB are seen as favorable conditions for monetary easing in early 2026, while reforms are expected to boost market risk appetite in China [1] - The "Goldilocks" scenario is emerging, which is favorable for U.S. stock performance. Although the U.S. economy is showing signs of marginal cooling, its resilience remains, and the gradually weakening inherent inflation may support corporate earnings expectations, potentially driving U.S. stock indices higher [1]

Group 1 - The Federal Reserve is expected to announce a 25 basis point rate cut in its December meeting, influenced by a weak labor market and recent statements from policymakers [1][2] - A rate cut is anticipated to boost risk assets, particularly benefiting technology stocks due to lower discount rates on future cash flows, which enhances the valuation of growth companies [1][2] - The overall market sentiment remains positive, supported by stable corporate earnings and macro data, despite the high valuation of risk assets and narrowing fixed income spreads [2] Group 2 - The impact of the Federal Reserve's monetary policy extends beyond the U.S., affecting global asset classes, including U.S. Treasuries and commodity prices, with potential spillover effects on the global economy and stock markets [2] - Gold is expected to perform well during the Fed's rate cut cycle, as lower interest rates reduce the opportunity cost of holding gold and typically coincide with rising inflation expectations, enhancing gold's appeal as an inflation hedge [3]

Core Insights - Retail investors are dominating the U.S. stock market at an unprecedented scale, reshaping market dynamics through options and small stock trades as traditional institutional investors adopt a cautious stance amid historically high stock prices [1][2]. Group 1: Retail Investor Influence - The volume of 0DTE (zero days to expiration) options has surpassed 60% of total U.S. stock trading volume for the first time, indicating a significant shift in the influence of retail investors in the derivatives market [2]. - Retail investors are increasingly using 0DTE options due to their high leverage and potential for quick profits, contrasting with the cautious approach of hedge funds and long-term investment funds [2][3]. - The dominance of 0DTE options is affecting market price discovery and volatility, creating a unique market environment where prices rebound quickly after declines due to retail buying pressure [2]. Group 2: Surge in Fractional Share Trading - Fractional share trading has surged to a historical high, with its share of total trading rising from 31% in January 2019 to 66% in the third quarter of 2023, reflecting a significant increase in retail investor participation [3]. - The S&P 500 index shows that 59% of its stocks (293 out of 500) are priced between $100 and $1,000, with 78% of trades in this price range being executed as fractional shares [7]. Group 3: Continued Retail Fund Inflows - Retail investors have consistently pressured institutional investors, maintaining a net buying position in 19 out of the last 22 weeks [8]. - Citadel Securities reports that retail stock clients have maintained structural buying trends for 20 consecutive months in both nominal amounts and share counts [11]. - Recent data indicates that retail fund inflows reached a net buying balance of $16 billion, with overall market trading volume increasing by 8% week-over-week to 17 billion shares, demonstrating sustained risk appetite [13].

Core Viewpoint - The global capital market is increasingly focused on the potential shift in the Federal Reserve's monetary policy, with rising expectations for interest rate cuts in September [1][2][4] Group 1: Federal Reserve's Rate Cut Expectations - Multiple institutions are betting on a rate cut by the Federal Reserve in September, driven by recent inflation and employment data [2][3] - Recent inflation data has been in line with or below expectations, alleviating concerns about a rebound due to tariffs, thus supporting the case for a rate cut [2][3] - The unemployment rate in the U.S. rose to 4.3% in August, with job additions significantly below market expectations, which has heightened rate cut expectations [2][3] Group 2: Impact on Emerging Markets - A potential rate cut by the Federal Reserve is expected to reshape global capital flows, providing a revaluation opportunity for emerging markets [1][4] - Historically, rate cuts by the Federal Reserve have positively impacted A-shares and Hong Kong stocks, particularly benefiting the more liquidity-sensitive Hong Kong market [4] - The current improvement in market sentiment and fundamentals in A-shares and Hong Kong stocks may amplify the benefits from a rate cut, with Hong Kong's low valuation and supportive domestic policies creating a dual attraction [4][6] Group 3: Asset Allocation Strategies - The anticipated rate cut is likely to create a favorable window for risk assets, with different scenarios leading to varied asset performance [5][6] - In a soft landing scenario, risk assets like U.S. stocks may perform well, while gold may benefit during the rate cut anticipation phase [5] - A dynamic allocation strategy is recommended, focusing on emerging markets and sectors sensitive to interest rates, particularly in A-shares and Hong Kong stocks, which may see improved performance due to lower financing costs and technological advancements [6]

Group 1 - The core viewpoint is that the expectation of a Federal Reserve interest rate cut is rising, which could reshape global capital flows and provide opportunities for emerging markets [1][2] - Analysts predict that the Federal Reserve is likely to initiate preventive rate cuts in a soft landing scenario, creating a window for risk assets to be positioned [1][4] - The upcoming interest rate decision in September is heavily influenced by recent U.S. inflation data and employment market conditions, with a significant rise in unemployment and lower-than-expected job growth [2][3] Group 2 - The Federal Reserve's potential rate cuts are expected to positively impact A-shares and Hong Kong stocks, particularly benefiting the more liquidity-sensitive Hong Kong market [2][3] - Historical trends indicate that rate cuts typically support A-shares and Hong Kong stocks, with current market sentiment and improving fundamentals enhancing this effect [3][5] - The dynamics of capital flow between U.S. stocks and Asian markets will need to be monitored post-rate cut, as funds may remain in U.S. equities [3][5] Group 3 - Different scenarios of rate cuts will lead to varying asset performances, with preventive cuts in a soft landing likely benefiting equities, while passive cuts in a recession may favor safe-haven assets like gold and U.S. Treasuries [4][5] - The current market environment suggests that the upcoming rate cut is more aligned with a preventive approach, indicating a favorable window for risk assets [4][5] - Investors are advised to adopt a dynamic allocation strategy, focusing on emerging markets and sectors sensitive to interest rates, while closely tracking economic data and policy signals post-rate cut [5]

Group 1 - The survey conducted from July 3 to July 10 covered 175 fund managers managing $434 billion in assets, revealing that investor risk exposure has reached its highest level since 2002, with a significant increase in stock allocation and improved earnings expectations, while recession fears have nearly vanished [1] - The S&P 500 index continues to hit record highs, reflecting increased market confidence in corporate earnings prospects and the U.S. ability to handle trade disputes [1] - Bank of America analyst Michael Hartnett noted that "greed is always harder to reverse than fear," emphasizing that despite the optimistic investor sentiment, the survey has historically indicated key market turning points in the past 12 months [1] Group 2 - Cash allocation is below 4.0%, soft landing expectations exceed 90%, and stock over-allocation is at 20%, suggesting the market may be approaching an "overheated" state [1] - The survey identified the most crowded trading strategies currently as shorting the dollar (34%), going long on the "seven giants" tech stocks (26%), going long on gold (25%), and going long on EU stocks (6%) [1] - Investors expect the final tariff rate from the U.S. on trade partners to be 14%, an increase of 1 percentage point from June [1] Group 3 - Hartnett added that while there is a risk of a pullback, a large-scale sell-off is not anticipated this summer, as stock exposure has not yet reached extreme levels and bond market volatility remains manageable [1]