Prasher Global Investment Solutions' International Head and Portfolio Manager Thomas Poullaouec, along with the Prasher Asia Investment Committee, noted that while recent ceasefire agreements have temporarily eased energy price pressures, the unresolved situation in Iran, marked by significant divergences in stakeholder demands, continues to fuel market concerns over rising uncertainty. The risk of further escalation remains. Given that Middle East tensions are increasing inflationary risks and potentially hampering economic growth, Prasher has reduced its equity allocation from overweight to neutral. In the U.S. market, considering potential delays in policy easing, the firm has downgraded its allocation to U.S. small-cap stocks to neutral. For European, Japanese, and Asian (ex-Japan) markets, which are more vulnerable to energy shocks due to higher reliance on Middle Eastern energy, allocations have also been trimmed to neutral. In contrast, Prasher has slightly raised its allocation to Chinese equities to overweight, citing their lower correlation with global markets. The firm has also increased exposure to real asset-related stocks to overweight as an inflation hedge. Prasher highlighted that energy-importing nations remain the most vulnerable; however, even the U.S., which has achieved energy self-sufficiency, is not immune. Rising global energy prices will permeate domestic costs, affecting fuel, transportation, and broader economic sectors. Even if tensions eventually ease and energy shocks prove temporary, long-term impacts are emerging—for instance, the U.S. recently proposed a nearly 50% year-on-year increase in its 2027 defense budget, largely aimed at addressing the Iran situation. Additionally, the previously passed "Big and Beautiful Act" in the U.S. has already elevated fiscal spending, potentially adding nearly $4 trillion in debt, raising market concerns over U.S. fiscal and inflation outlooks. Amid ongoing geopolitical conflicts, constrained energy supply coupled with rising debt levels is once again bringing inflation risks into focus, prompting markets to reevaluate inflation hedging strategies. Notably, despite heightened Middle East geopolitical risks, most global equity markets have shown resilience. Some market views suggest this reflects optimism that the conflict may be short-lived. However, as tensions persist and risks escalate, this expectation is becoming increasingly uncertain. Prasher indicated that corporate earnings remain relatively stable. Over recent years, earnings have demonstrated resilience even as geopolitical risks fluctuated. This year, earnings expectations have accelerated on an already strong foundation, supported by fiscal支出, capital expenditure, tax incentives, and broadening AI-related opportunities. As earnings season approaches, market attention will shift to whether companies begin reflecting the impact of these risks on their outlooks. For now, earnings momentum continues to support markets and may help extend the trend of broadening market leadership beyond a few megacap stocks, provided geopolitical conditions do not deteriorate significantly. In fixed income, Prasher maintains an underweight allocation but has moderately reduced its preference for short duration. Given rising short-term uncertainty, the firm has slightly decreased its underweight in long-term U.S. Treasuries and increased its overweight in short-term inflation-linked swaps to manage inflation risks. Concurrently, cash allocation has been raised to a slight overweight to retain flexibility and liquidity, enabling the capture of potential market dislocations.