With rising expectations of US interest rate hikes keeping the 10-year Treasury yield near 4.7%, and ongoing US-Iran tensions sustaining elevated oil prices, the global investment climate remains under pressure. Amundi Asset Management's senior Asia investment strategist, Yao Yuan, noted that with the 10-year yield already at the upper end of its recent trading range, a breakout to 5% cannot be ruled out if oil prices surge past $100 per barrel, the Federal Reserve adopts aggressive tightening measures, or US fiscal anxieties escalate.

On equities, Yao believes global markets are at a crossroads, searching for short-term direction. Risks within the AI ecosystem are mounting, as hyperscale cloud providers experience sharp declines in free cash flow, making capital expenditures increasingly reliant on capital market financing and driving an exponential rise in AI-related debt issuance. Meanwhile, intensifying competition from sovereign bond issuance and expectations of tighter central bank monetary policy are pushing up the cost of capital. Any signs that rising financing costs are curbing AI spending could therefore dampen sentiment and trigger another wave of selling.

Furthermore, sluggish progress in AI monetization is adding to market concerns, while Chinese open-source architectures pose a competitive threat. Despite maintaining a positive long-term outlook for AI, Yao emphasized that the sector's rising tide no longer lifts all boats, and current investment requires greater discipline and patience. He recommends diversified positioning across the midstream, middle, and downstream segments of the value chain.

Turning to Hong Kong stocks, Yao argued that the market cannot escape the effects of tightening global liquidity, escalating geopolitical tensions, and the AI-driven selloff in technology shares. Lacking domestic growth catalysts, Hong Kong equities must look externally for direction, and given the macro uncertainty, he advises investors to maintain a cautious approach.