Perspectives by Mark Chng, Head of Fixed Income & Currencies Sales, Southeast Asia
While markets appear confident, investors are preparing for a wide range of macro scenarios.
At a glance
- Markets look calm. Investors remain cautious.
- Geopolitical fragmentation, energy disruption and AI investment are reshaping the macro landscape.
- Traditional diversification may not offer the same protection in a more inflation-sensitive environment.
- The new macro regime deserves a new playbook.
Heading into the second half of 2026, markets appear relatively calm, with equity markets near recent highs, credit spreads tight, growth expectations stable, and volatility well below levels typically associated with stress.
Yet investors are growing increasingly concerned about a wide range of risks — including energy disruption, geopolitical fragmentation, a potential AI valuation reset, and increasing reliance on leverage.
At our Global Markets Conference in Singapore this year, we heard from leading investors how they are navigating a rally against a backdrop of persistent investor caution, as market strength coexists with concern that prices may have moved ahead of fundamentals.
The discussion reinforced the view that today’s uncertain macro environment calls for a new playbook — one that can withstand a range of scenarios.
Identifying risk factors and ensuring the ability to execute positions at scale will be key to navigating volatility and positioning for opportunities.
Identifying Risk
Recent geopolitical events have reminded investors that inflation shocks can emerge from unexpected sources — from energy disruption and supply chain constraints to trade fragmentation and the reshoring of critical industries. These risks are difficult to hedge because they can escalate quickly from regional events and affect global market pricing.
Energy remains one important way these shocks can feed into inflation. Disruption to key shipping routes or physical barriers to supply can create renewed inflationary pressure, even when markets appear relatively calm.
Brent crude surged sharply during the recent period of heightened tensions in the Middle East, before easing as concerns over supply disruption moderated.
Central banks remain caught between inflation mandates and growth concerns. Mindful of the inflation experience of 2022, policymakers may be more cautious in easing policy, with responses varying depending on fiscal capacity, current accounts and exposure to energy prices.
Geopolitical fragmentation is also creating structural shifts in supply chains.
A more fragmented global order is leading economies to place greater emphasis on national security and strategic resilience. This is likely to increase the focus on reindustrialization, near-shoring and security-related spending, contributing to a rerouting of global capital flows.
Accelerating investment in AI and digital infrastructure is also part of this broader shift, as governments and companies seek to secure access to computing power, chips, critical minerals and power. The four largest US hyperscalers alone are on track to spend some US$715 billion on AI infrastructure in 2026, up 90% from 2025.1 While led by US technology companies, this build-out has global implications — particularly for Asia’s semiconductor and hardware supply chains, capital allocation, currencies and inflation.
This more inflation-sensitive environment has implications for investors. Bonds may no longer offer the same reliable defensive characteristics investors traditionally expected, leading many to question conventional approaches to asset allocation.
Yet such well-known risks may already be priced in. Disruption may instead come from less anticipated sources. Investors will need to remain proactive and be ready to respond as risks emerge.
Executing at Scale
As they build a new playbook for this uncertain future, investors also need to pay attention to technical obstacles.
Implementing macro views at scale is often a challenge, particularly in Asian markets, which are frequently the first to open after eventful weekends.
Commodity market participants are especially mindful of access to liquidity, and many took steps to raise additional funding during the spike in energy price volatility in the first half of the year.
Emerging markets, meanwhile, are benefiting from increasing digitization and inclusion in equity benchmarks, which has led to standardization and improved access for international funds.
Asset allocation decisions need to account for liquidity constraints, as well as cross-correlations between different asset classes and different sectors.
Traditional 60/40 allocations are increasingly being supplemented by alternatives, with many investors allocating more capital to real assets, infrastructure and other structural themes.
Macro investors today have a range of opportunities on the table. Compared with 2022, when inflation pressures drove broad-based monetary tightening, today’s policy response will require more nuance. A range of outcomes are possible in different markets, which presents a rich opportunity set for traders able to express a view.
For investors, building a robust portfolio will mean balancing conviction with flexibility. The new macro regime deserves a new playbook.