As 2025 is about to end, what can we expect in the financial markets in 2026? Here are 10 key points worth noting:
1. The MSCI Global Index rose about 20 percent this year, marking the third consecutive year of gains. Historically, the MSCI Global Index has never experienced four consecutive years of rising markets in the past decade. Therefore, there is a high probability that global stock markets will undergo a correction in 2026, with an average adjustment exceeding 10 percent.
2. Fiscal pressures in major global economies will persist, which will exacerbate trade barrier issues among countries.
3. Geopolitical factors and inflation concerns helped gold and silver perform well in 2025. However, if global stock markets experience a sharp decline in 2026, gold and silver prices are also likely to undergo significant corrections, as has often happened historically.
4. The AI sector will no longer be a driving force supporting global stock markets. This is not because AI development will stop, but because AI-related stocks have become somewhat overvalued, creating bubbles in many listed companies. Thus, the AI sector could potentially drag down global markets in 2026.
5. Oil prices underperformed resource prices in 2025, but this will reverse in 2026. The market underestimated the geopolitical risks supporting oil prices in 2025.
6. There is a very high risk that major global economies will simultaneously enter a recession in the latter half of 2026. As the AI hype fades, investment in AI will sharply decline, causing the economy to lose growth momentum and support.
7. Among major currencies, the Japanese yen may become the best-performing currency. This is not due to economic fundamentals but because investors’ risk appetite will decrease, reducing carry trade activities and thus easing selling pressure on the yen.
8. Bitcoin is unlikely to hold above the US$100,000 (HK$780,000) level in 2026. This is because Bitcoin clearly lacks true decentralization, and the US government can easily freeze Bitcoin assets, leading to a continuous decline in demand.
9. 30-year government bonds will continue to be sold off, while investors will focus only on 10-year government bonds, as no country can guarantee that a third world war will not occur within 30 years.
10. Countries will continue to increase military spending. Therefore, if the stock market undergoes a major correction, defense stocks will be the most worthwhile to buy at lower prices.
Andrew Wong is a veteran independent commentator
