CIMB Highlights Discipline, Diversification, and Derisking as Keys to Navigating 2026 Markets

SINGAPORE, Jan. 22, 2026 /PRNewswire/ -- CIMB expects 2026 to be defined by AI's growing influence and Asia's rising investment appeal. While technology giants pour billions into AI capacity, history cautions against exuberance, underscoring the need to focus on high‑quality large‑cap tech and AI supply chain leaders. At the same time, Asia's expanding role in AI and ongoing market reforms are creating a supportive backdrop for earnings and valuations. Against this dynamic landscape, CIMB highlights opportunities in resilient Asian equities, quality corporate bonds, and diversified portfolios enhanced with hedging strategies to navigate volatility and deliver sustainable returns.

"Policy support and interest rate cuts have given capital markets a strong start, but as we move into 2026, we remain cautious of fiscal challenges, shifting global trends, and concentrated bets in AI," said Jason Kuan, Director, Investment Research and Advisory at Chief Investment Office, CIMB Singapore. "At CIMB, we recommend focusing on the 3Ds: Discipline by staying selective with quality stocks and credit; Diversification by adding exposure to Asia, with defensive markets like Singapore and Malaysia; and Derisking through gold, hedge strategies, private equity, and tailored structured investments. This balanced approach helps investors seize opportunities while staying resilient through market volatility."

Kuan added, "Investors may want to be more selective than just focusing on the U.S. market. U.S. stock prices are currently quite high, and uncertainty around trade policies and government spending could create more volatility. Because of this, we expect more investors to look beyond U.S. markets and explore opportunities in Asia. Singapore, in particular, stands out as a safe and stable investment destination, supported by reforms that have boosted confidence and driven strong returns. At the same time, gold has surged to new highs as investors seek safety amid global tensions. While corrections may present opportunities to add positions, we believe gold should be part of a diversified portfolio, but caution against chasing the rally simply on recent gains."

AI Will Shape the Market Narrative in 2026

Leading technology companies are investing billions to meet the surging demand for artificial intelligence (AI) compute capacity. While AI continues to stand out as a powerful long-term investment theme, current market dynamics call for measured caution. History shows that periods of exuberance often precede the adoption of truly transformative technologies. In this environment, CIMB recommends focusing on high-quality large-cap technology companies and AI supply chain leaders, which are better positioned to withstand volatility and deliver sustainable growth.

AI Momentum and Market Reforms Position Asia as Key Investment Destination

Two key forces are shaping the next phase of Asian equities: the region's expanding role in the global AI supply chain and market reforms across major economies that are enhancing governance, liquidity, and creating a more supportive backdrop for earnings and valuations.

Beyond the US, Asia is playing an increasingly important role in the global AI supply chain. The rise of DeepSeek in China, coupled with sustained demand for semiconductors and AI‑related hardware in Taiwan region, South Korea, and Japan, underscores the region's growing technological capabilities.

At the same time, structural reforms are strengthening capital markets. Japan and South Korea are driving improved capital allocation and shareholder returns, China is channeling more institutional capital into domestic equities while supporting buybacks and tightening oversight of listed companies, and Singapore is implementing measures to revitalise the equity market, attract investment, and boost liquidity in small- and midcap stocks.

For investors, these developments suggest Asia will remain a significant investment destination, offering opportunities in markets with clear earnings visibility, reform momentum, and policy support - while acknowledging that geopolitical risks and global economic conditions will continue to shape volatility.

Navigating Volatility in a Weaker U.S. Dollar

Global growth is expected to proceed at a more measured pace, with stronger momentum in the first half of the year, followed by moderation in the second half as the delayed impact of tariffs takes effect. In the U.S., Federal Reserve rate cuts and sustained investment spending, particularly in AI and infrastructure, should continue to support growth, even as fiscal sustainability remains a longer‑term concern.

The U.S. dollar is likely to stay on a weakening trajectory in 2026, though the decline is expected to be volatile rather than linear. For investors, this underscores the importance of diversifying away from the U.S. dollar, especially during periods of temporary strength, while remaining mindful that volatility may intensify around key events such as changes in Fed leadership and the U.S. mid‑term elections.

Enhancing Portfolio Stability Through Fixed Income

Fixed income is set to play a more important stabilising role in portfolios in 2026, as bond market volatility is expected to rise amid global uncertainty. Additionally, the U.S. yield curves are expected to bear-steepen, creating a more complex environment for bond investors.

In 2026, we recommend building a bond portfolio with an average short‑to‑mid duration, focusing on high‑quality corporate bonds in the three- to seven-year range. These bonds can provide steady income, supported by strong companies with solid financials. Within this space, AUD‑ and GBP‑denominated bonds are especially appealing, with the former offering attractive returns and the latter providing potential gains, while helping to keep risk under control.

Building Portfolio Resilience

As global markets shift, staying diversified is more important than ever, investors can benefit from balancing portfolios across core global equities and fixed income. We see promising opportunities in Asian equities and short-to-mid tenor corporate bonds, which offer attractive value. Adding hedges through gold and selective structured investments can further strengthen resilience, helping portfolios deliver steadier, risk-adjusted returns in uncertain times.

This is for general information only and not financial advice. Subject to the disclaimer in CIMB's "2026 Outlook: The Need for Measured Exuberance".

About CIMB

CIMB is one of ASEAN's leading banking groups and Malaysia's second largest financial services provider, by assets. Listed on Bursa Malaysia via CIMB Group Holdings Berhad, it had a market capitalisation of approximately RM75.2 billion as at 31 March 2025. It offers consumer banking, commercial banking, wholesale banking, transaction banking, Islamic banking and asset management products and services. Headquartered in Kuala Lumpur, the Group is present across ASEAN in Malaysia, Indonesia, Singapore, Thailand, Cambodia, Vietnam and Philippines. Singapore is one of its key markets with approximately 1,000 employees serving clients across consumer, commercial, wholesale and transaction banking products and services.

Beyond ASEAN, the Group has market presence in Mainland China, Hong Kong and UK. CIMB has one of the most extensive retail branch networks in ASEAN with 592 branches and over 33,000 employees as at 31 March 2025. CIMB's investment banking arm is one of the largest Asia Pacific-based investment banks, which together with its award-winning treasury & markets and corporate banking units comprise the Group's leading wholesale banking franchise. CIMB is also the 92.5% shareholder of Bank CIMB Niaga in Indonesia, and 94.8% shareholder of CIMB Thai in Thailand.

Sustainability is a core pillar of CIMB's Forward30 strategy and 2030 roadmap. The Group is guided by its Green, Social, Sustainable Impact Products and Services ("GSSIPS") framework, an internal taxonomy designed to deliver impactful sustainable finance. Since launching its sustainable finance framework in 2021, CIMB has progressively raised its ambitions, increasing its initial RM30 billion target to RM100 billion for 2021–2024. The Group now targets RM300 billion in sustainable finance by 2030, reinforcing its commitment to enabling a lower-carbon and more inclusive economy across the region.

SOURCE CIMB Singapore