2026 looks set to begin with a constructive backdrop for Asia and Emerging Markets, supported by fiscal and monetary stimulus, and a weaker US dollar. Policy reforms, rising consumption and the adoption of Artificial Intelligence are some of the structural themes that will offer long-term compelling opportunities across the region. Meanwhile, monetary policy across major economies is set to remain accommodative, supporting bonds as inflation moderates and real yields stay high. Limited supply of bonds in Asia, especially from China, should keep technical factors supportive into 2026.

However, risks persist. Geopolitical tensions, elevated US valuations, equity market concentration, potential US dollar strength, and trade policy uncertainty could trigger volatility. To navigate these challenges, diversification and robust risk management using systematic hedging, tactical alpha, and quantitative strategies are essential for portfolio resilience. As Asia and Emerging Markets are far from homogenous, an active approach is needed to unlock uncorrelated returns.