HSBC Private Bank highlights AI, energy and security as next investment cycle drivers

Artificial intelligence (AI), energy and security will drive the next phase of global investment opportunities and corporate earnings growth, according to HSBC Private Bank’s Q3 2026 Investment Outlook, “Where Capital Meets the Future”.

Rising global competition and national security priorities are creating the urgency, funding and policy support needed to sustain capital market activities. The bank also expects an expanded role for private markets to supplement the investment funding gap.

In its Q3 2026 Investment Outlook, HSBC Private Bank remains optimistic about the resilience of the global economy and expects volatility to be manageable. Drawing on lessons from the COVID-19 shock and shifting international trade dynamics, the bank cites that governments and businesses have been diversifying supply chains, trade relationships and energy sources to support economic growth.

The bank adds that geopolitical developments are contributing to an uneven economic landscape, further stressing the importance of distinguishing potential winners and losers across issuers, sectors and regions.

Willem Sels, global chief investment officer, HSBC Private Bank and Premier Wealth, said: “Volatility is here to stay as global markets react to fast-moving risks and headlines. The priority is to stay disciplined with resilient and diversified multi-asset portfolios that can withstand short-term uncertainty, while keeping sight of longer-term opportunities emerging from structural growth trends.”

Against this backdrop, the bank outlines a portfolio strategy focused on longer-term tailwinds relating to AI, energy independence and aerospace themes for its high-net-worth and ultra-high-net-worth clients. The approach highlights opportunities in technology, industrials, materials and utilities sectors, where investment in innovation remains strong and continues to favour growth-style over value companies.

This quarter’s outlook also expects the US Federal Reserve to keep policy rates on hold throughout 2026, reflecting the balance between inflation and growth risks.

HSBC Private Bank’s four priorities for Q3 2026

Invest in the AI-led future: Strong earnings surprises, easing monetisation concerns and attractive valuations after the software sell-off present opportunities in semiconductors, data centres and AI adopters.

Position for security and energy independence: Geopolitical shifts are accelerating efforts to diversify energy supply, expand electrification and increase grid investment.

Build portfolio resilience with multi-asset strategies: Bonds, gold, alternatives and currency diversification remain core building blocks, complemented by infrastructure to provide stable, inflation-linked cashflows.

Tap into Asia’s innovation and income opportunities: A barbell strategy can capture Asia’s innovation-led investment cycle while balancing with income opportunities, paired with a geographical overweight in mainland China, Hong Kong, Singapore and South Korea.

As investment in AI accelerates globally, Asia is well placed to benefit given its leadership in semiconductors and rapid progress in large language models. Beyond AI, investors can also find a broadening opportunity set through income potential in bonds, alongside continued improvements in corporate governance reforms across Japan, South Korea, mainland China and Singapore.

Singapore economy and market outlook

Singapore continues to benefit from its position as a regional hub for trade, finance and technology, supported by robust capital flows and ongoing investments in innovation and infrastructure.

Singapore’s real gross domestic product (GDP) growth is expected to slow from 5.0% in 2025 to 2.9% in 2026. This moderation reflects the fading of post-pandemic recovery momentum and the impact of elevated energy prices and global uncertainties, but growth remains positive and above developed market average. Higher energy prices and supply chain disruptions are likely to push inflation from 0.9% in 2025 to 2.4% in 2026. However, the inflation levels are likely to remain within manageable range.

The bank has a mild overweight stance on Singapore equities within the Asia ex-Japan region. This is based on Singapore’s exposure to structural growth drivers such as AI, technology and infrastructure, as well as its defensive qualities and attractive dividend yields. Singapore equities continue to benefit from ongoing capital flows, policy support, and their role as a regional safe haven.

Re-disseminated by Wealth and Society