Navigating a fragmented world

The year now drawing to a close has been one of paradox. Despite Donald Trump’s return to the White House, geopolitical tensions and growing economic fragmentation, financial markets have continued their ascent. Welcome to the era of gigantism: the S&P 500 has hit the 7,000-point mark, Nvidia has smashed through the $5 trillion level in market capitalisation — more than the GDP of France! —, and the technology sector has posted returns of more than 30% over twelve months[1]. Confidence is holding up — sometimes even against the tide.

Behind the stock market records, fragilities remain. The higher the ascent, the greater the fear of a fall. Value chains are being redesigned in the name of security and sovereignty, international governance is weakening, and new poles of influence are emerging. The global economy has been walking a tightrope: buoyed by the technological revolution and looser monetary policy, but exposed to persistent structural and political tensions.

Navigating this fragmented world requires clear-sighted and selective reading. In 2026, markets will still have to weigh up promises of innovation and geopolitical tensions. The question is no longer whether the world order is changing, but how to invest intelligently.

The great powers at a crossroads

United States — Innovation as the driver, politics as the pressure

Despite the reintroduction of tariffs, a restrictive migration policy and the longest administrative shutdown in history, the US economy has been buoyed by strong investments related to artificial intelligence. This growth is expected to slow: the erosion of purchasing power is undermining the poorest households, while the Federal Reserve is caught between persistent inflation and a slowing labour market. In 2026, the Fed’s credibility will be tested as it comes under increased political pressure.

China — Caught between strategic dominance and internal fragility

Beijing has asserted itself against Washington in the trade war, consolidating its dominance over rare earth elements, which are essential for military and technological production. While the Chinese economy is still struggling to emerge from deflation, its markets have rallied, driven by technology stocks and government support. But the question remains: does this surge mark a lasting turning point or a temporary lull in a deeper adjustment cycle?

Europe — The revival of the Old World?

In recent years, the European economy has shown unexpected resilience. Despite an energy crisis and rising US tariffs, activity has continued to grow close to trend. The ReArm Europe plan, German fiscal stimulus and monetary easing should create an even more favourable policy mix in 2026. Could the "European Awakening" finally see the light of day and deliver a sustainable performance for the markets in the Old World, despite a fragmented political environment?

The era of artificial intelligence: between revolution and illusion

A new industrial revolution — artificial intelligence — is under way, with global infrastructure spending expected to reach $6.7 trillion by 2030.[2]

While societal and productivity gains have yet to materialise, an interconnected ecosystem of tech giants and new entrants is rapidly taking shape. However, valuations, now close to 27 times future earnings[3], are raising questions. The current euphoria is reminiscent of the dotcom bubble of the year 2000 – but who remembers that?

The rise of AI comes with a huge energy challenge. The proliferation of data centres — true “digital factories” — requires unprecedented power. By 2030, their consumption could at least double[4]. Meeting this demand requires accelerating the energy transition: without abundant green energy, can the digital revolution be fully realised?

We expect the healthcare sector will be one of the major beneficiaries of this transformation. AI is revolutionising diagnosis, early detection and personalised medicine. After a period of regulatory uncertainty, the recent agreement between Pfizer and the US administration has restored confidence in an undervalued sector. With solid fundamentals, double-digit growth and the return of M&A, healthcare could once again become a pillar of long-term performance.

Building a portfolio for a new world order

In this new environment, discipline and selectivity are the investor’s best guides. Positive correlations between equities and bonds reduce the traditional role of government bonds as a safe haven. Gold, long seen as a hedge, is now more like a speculative asset. Alternative strategies — due to their low correlation to traditional markets — offer valuable sources of resilience.

In a yield-seeking environment, selectivity remains essential in both the public and private credit markets. Vigilance is required, as default rates, so far contained, may begin to rise again. After a period of spectacular expansion, the broadly-defined private credit segment could be reaching its limits: less transparency and liquidity, and weaker contractual protections. These vulnerabilities will be important to monitor for the listed market and will require careful issuer selection.

Finally, international diversification remains imperative. It makes it possible to capture differentiated economic cycles and multiple sector opportunities. The integration of structural trends — artificial intelligence, healthcare, energy transition, impact investing — strengthens the resilience of portfolios and their relevance to the real economy.

Turning fragmentation into an opportunity

The year 2026 promises to be pivotal. The US mid-term elections, the reshaping of international alliances, and progress on the energy transition are redrawing the map of risks — and opportunities.

Against this backdrop of new trends, our priority remains unchanged: preserving portfolio resilience while capturing new performance drivers. Discipline, diversification and long-term vision remain the foundations of our approach.

Our Conviction is clear: the fragmentation of the world is not an obstacle, but a turning point. It marks the transition to a more multi-polar, digital and, hopefully, more sustainable system. Because although sustainability issues are sometimes contested, they remain critical from a long-term perspective: let’s never forget that, by 2050, climate change could cost the global economy 17% of GDP by 2050.[5]

On that note, we wish you the best for 2026 and hope it is filled with health, serenity and success.

Our teams remain firmly committed to working alongside you to overcome challenges and seize opportunities.

Throughout December, we will have the pleasure of sharing the analyses of our experts on ten key themes to consider in building a resilient and high-performance portfolio for 2026.