Some useful insights here from Dr. Matthias Ramser, Chief Investment Officer (CIO) at Reichmuth & Co Privatbankiers.
Around a quarter of the global economic growth of 3.2 percent in 2025 was attributable to high investments in the expansion of AI infrastructure. This made AI a central pillar for overall robust but below-average growth in the long term.
In 2026, we expect this development to be more broadly based, with global growth accelerating slightly. The decisive factor here is the increasing distribution across several sectors and regions and thus a lower dependence on individual structural drivers.
A key driver is the global interest rate cutting cycle of central banks. This was initiated by the European Central Bank in 2024 and has been broadly supported worldwide since last year. The prerequisite remains a controlled inflation path, which opens up further monetary policy leeway for central banks. Experience has shown that the growth-supporting effect of lower interest rates unfolds with a time lag and is likely to become increasingly visible, especially in the further course of 2026.
Additional impetus is coming from the regions: in the USA, business-friendly policies are supportive, while in Europe, extensive fiscal programmes are stimulating investment in infrastructure and defence. In Asia, the weakness of the US dollar is providing a tailwind. This environment is flanked by comparatively low oil prices, which remain cyclically friendly, which support purchasing power and relieve the cost base of many companies.
Wider market participation in equity markets
Since the beginning of the year, a pronounced sector rotation has been observed on the global equity markets. While in the previous year it was mainly highly capitalized, AI-sensitive stocks from the technology and communications sectors that dominated, cyclical sectors such as industrials and materials are currently in the foreground. At the same time, smaller and medium-sized companies are gaining momentum, allowing equal-weighted indices to outperform their capital-weighted counterparts.
This development is positive from a market point of view, as it broadens the equity bull market and increases the resilience of the markets. Cyclical sectors benefit not only from a brightening economy, but also from more attractive valuations compared to defensive growth segments. In addition, the first positive earnings revisions are becoming apparent, which fundamentally underpin the rotation. Against this backdrop, we expect this trend to continue in the coming quarters.
Latin America with a new tailwind
Latin American equities have shown volatile sideways performance over the past two decades and have long been in the background compared to other regions. More recently, however, there have been signs of a structural shift in sentiment. Policy reforms and more market-oriented economic policy approaches – including in Argentina, Mexico and Chile – are boosting investor confidence and improving medium-term growth prospects.
In addition, in a geopolitically tense environment, Latin America benefits from the diversification of global supply chains and its role as a resource-rich, strategically comparatively neutral region. An additional stimulus comes from the weakening of the US dollar, which has traditionally been supportive for emerging markets. At the same time, many countries in the region have high real interest rates, which gives central banks additional room for manoeuvre in monetary policy. In combination with attractive valuations by international standards, we continue to see significant catch-up potential compared to the world equity index.
Diversification: Quality stocks complemented by cyclicals, emerging markets and commodities
In an environment that continues to be characterized by geopolitical uncertainty, a focused focus on quality stocks with solid balance sheets and reliable dividend strength remains key – especially in Switzerland and Europe. However, in view of an improving economy, it seems sensible to supplement portfolios with cyclical sectors and selected emerging markets. In addition to Asia, Latin American equities are increasingly coming into focus, with selective implementation and active risk management remaining crucial. Following the parabolic rise in gold and silver, we also recommend shifting some of the earnings to selected commodity stocks to benefit from a cyclical pick-up in demand and diversify the portfolio more broadly.
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