Eastspring Investments
Apr |2026 5 min
Summary
Eastspring’s Multi Asset Portfolio Solutions team remains tactically constructive on global equities, favouring the US over Europe, but with clear restraint amid unresolved tensions. On fixed income, the team is neutral on US Treasuries and cash, favouring US high yield over investment grade on better all‑in yields, and select EM hard‑currency sovereigns for their attractive carry.
Macro: Uneven growth, higher inflation, tighter policy
The war’s oil supply shock is likely to shave around 0.5%–0.6% off global growth, with the damage rising the longer the Strait of Hormuz remains effectively closed. In Asia, the impact is uneven. India, Philippines and Thailand are most exposed due to energy deficits and weak tourism due to higher air fares and travel disruption. India is also more exposed because the Gulf region accounts for a significant share of its exports.
By contrast, China, Korea and Taiwan look better insulated. China is more resilient due to large oil reserves, alternative energy sourcing and strong demand for EVs and renewable technologies. Korea and Taiwan are cushioned by strong semiconductor export demand from Artificial Intelligence (AI) infrastructure spending. Guidance from end-user technology companies in the US points to continued high growth in exports. These differences in exposure to global factors are producing stark differences in the outlook for earnings growth across Asia.
Meanwhile, higher energy prices are feeding through to broader inflation in Asia, with subsidies only delaying pressures that are likely to intensify if the energy shock persists. Rising inflation risks have pushed global monetary policy from easing to tightening, with Asia facing further rate pressure unless energy disruptions ease and the Fed relief materialises later in the year.
Asset Allocation: Tactically risk‑on with restraint amid Iran‑related risks
Geopolitical tensions remain elevated, but a fully defensive stance risks missing opportunities. We stay cautiously constructive on global equities over the next three months, preferring US over Europe due to energy risks, and favouring selective EM and Asia markets with attractive valuations. China is a relative winner given its energy and commodity reserves while Korea is benefitting from the AI‑driven capex boom.
We maintain a neutral stance on US government bonds given the upside risks to inflation. As for US credits, spreads remain tight but valuations appear better on a yield basis. As such we maintain our preference for US high yield bonds compared to investment grade bonds. We also continue to remain tactically constructive on Emerging Market (EM) hard currency sovereign bonds, which offer attractive carry, supported by strong investor demand for higher-yielding hard currency assets.
This is an extract from our Q2 2026 Market Outlook. Click here to download the full report which includes a special feature “Why it is important to stay invested through volatility”.
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The afore-mentioned entities are hereinafter collectively referred to as Eastspring Investments.
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