Stefan Eppenberger, Chief Investment Strategist, Vontobel:

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Year-to-date global index performance shows sharp polarization, driven largely by U.S. and international tech giants with AI exposure.

The MSCI EM Index is up nearly 30 percent in USD and has surpassed its 2021 high, with about a dozen Asian tech firms contributing half the gains – similar to the U.S., where fewer than ten tech/AI names account for roughly 30 percent of market cap and 60 percent of YTD returns. These companies trade at 2026 P/S multiples of 14x – up to five times the S&P 500 – reminiscent of the dot-com era.

«Does the rally have legs in 2026? At Vontobel, we say yes.»

Does the rally have legs in 2026? At Vontobel, we say yes.

Since overweighting equities in September 2022, we know that valuations alone seldom drive performance. Valuations looked high at end-2024, yet nine months later equities again outperformed.

Our approach blends macro, fundamentals and factor analysis. Supportive drivers include monetary easing, fiscal infrastructure spending, tax cuts, deregulation, rising productivity, low energy prices, a moderate dollar and low leverage.

Tech companies continue to show strong profitability and cash flow despite high capex. Together, these factors can support resilient earnings and potential upgrades into 2026/27. AI-bubble risks exist, but unlike 2000, today’s tech/AI firms generate around 40 percent of total market profits – a much firmer foundation.

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