According to insights from Fidelity International, global markets delivered a strong performance in 2025. Looking ahead to asset allocation strategies for 2026, the firm continues to advocate for a selective overweight position in equities to capture market opportunities while managing potential risks. The institution is optimistic about the stock markets in both the United States and China, believing that valuations in the Chinese market remain attractive, while maintaining a cautious stance on European equities.
George Efstathopoulos, Director of Investment Strategy at Fidelity International, noted that market expectations for continued accommodative interest rate policies are boosting liquidity and investor sentiment. Despite signs of a cooling labor market, corporate activity and earnings have shown resilience, and short-term fiscal stimulus is expected to sustain economic momentum into the first half of 2026.
From an asset allocation perspective, within fixed income, Fidelity maintains a highly favorable view of high-grade corporate bonds. Concurrently, the traditional safe-haven appeal of US Treasuries has somewhat diminished, with German government bonds and gold demonstrating more pronounced demand during periods of market stress.
Regarding regional allocation, Fidelity maintains an overweight position on US stocks. The Federal Reserve's ongoing accommodative stance and a reduction in trade policy uncertainties are supporting market sentiment and risk appetite. Although market concentration remains high, the technology sector's earnings continue to show momentum, and the trend of AI investment is becoming increasingly evident.
The firm is maintaining a watchful stance on European equities. While policy optimism has driven a market rebound, corporate earnings growth has lagged behind expectations. With European Central Bank interest rates nearing a neutral level, the scope for further easing appears limited.
Asian equities exhibited robust performance in 2025, with Greater China stocks delivering the most impressive results, achieving an average annual return of 33.71%. This was followed by Hong Kong stocks and Asia-Pacific ex-Japan equities, with returns of 31.69% and 29.26%, respectively. Overall, inflation in the region remains moderate, and the Federal Reserve's interest rate cuts are helping to alleviate pressure from interest rate differentials, with some Asian central banks having room for further monetary easing.
Fidelity maintains a positive outlook on the mainland China equity market. US-China trade relations have stabilized, and the overall growth momentum is favorable, reducing the immediate urgency for significant policy intervention. Valuations in the Chinese market continue to be attractive, and the global competitiveness of mainland China in areas such as innovation, artificial intelligence, and biotechnology is steadily increasing.
Furthermore, the mainland Chinese government's promotion of "anti-involution" policies, aimed at improving the competitive landscape and fostering industrial upgrading, is providing an additional catalyst for the market.