Article published in Le Temps, 18 January 2026
After two successive years of exceptional financial returns, and with geopolitics increasingly resembling a ‘Wild West’ landscape, what investment approach makes sense? The answer is straightforward: stay invested. Geopolitical events tend to have only a temporary impact on markets as long as they have no lasting effect on oil prices or permanently disrupt global supply chains. The US intervention in Venezuela may have been spectacular, but neither of these two conditions appears likely to apply in 2026. Venezuela’s vast oil reserves are unlikely to be developed at scale over the next twelve months, given the sheer investment required and an ongoing security environment that remains fragile. Even if, at some stage in the future, Venezuela were to redirect oil exports towards the US rather than China, it would have no impact on major global supply chains. As a result, the growth outlook for 2026 remains unchanged, with modest growth in developed markets and stronger momentum in emerging markets.
What's more, the US Federal Reserve also looks all set to cut its benchmark rate in the second half of 2026, which would be supportive for financial assets. However, valuations are high, which makes the balance between risk and reward more important than ever, and argues for even broader diversification than in recent years.
Geopolitical events tend to have only a temporary impact on markets as long as they have no lasting effect on oil prices or permanently disrupt global supply chains
Emerging markets offer value, breadth and selective opportunity
For investors, emerging market assets (across equities, bonds, and currencies) meet plenty of criteria in terms of value for money. In China, technology stocks and sustainability leaders are particularly interesting. Sectors such as communication services, consumer discretionary and IT sectors are trading at around 15x and 24x twelve-month earnings forecasts, compared to 21x to 27x for their peers in developed markets. The earnings growth prospects are broadly comparable.
Read also: Ten Investment Convictions for 2026 | Lombard Odier
China is also closing the technology gap with the US at pace. The rapid adoption of advanced technologies in daily life is accelerating opportunities for monetisation and strengthening cost advantages for Chinese tech companies, which remain suppliers of choice for both domestic and international users. With ample energy supply from renewables and nuclear power, China also appears well-positioned in the race for dominance in AI.
With ample energy supply from renewables and nuclear power, China also appears well-positioned in the race for dominance in AI
Developed markets highlight small and mid-caps, and quality dividends
In developed markets, where market valuations are higher, small and mid-cap companies and quality dividend stocks look attractive in terms of risk and return. Reinvesting dividends over the long term remains one of the most reliable strategies for preserving and growing equity portfolios. Quality dividend stocks can be found across cyclical sectors such as financials, energy, and industrials, as well as defensives like healthcare, consumer staples, utilities, and real estate, offering good diversification. Small and mid-caps have started to recover after a long period of disappointment in the second half of 2025, supported by looser monetary policy, earnings upgrades, and capital expenditure. They should continue to perform well in 2026, driven by accelerating earnings growth and attractive valuations relative to large caps. Productivity gains courtesy of AI, rising M&A activity, and potentially more favourable changes to US import tariffs may act as further catalysts. What's more, investor exposure to this segment is modest, leaving scope for further inflows.
Read also: Geopolitical volatility meets market resilience
Fixed income: focus on coupon income and convertibles
In bonds, with limited opportunities for yields to come down across the board in 2026, coupon income will be key. Beyond emerging markets debt in strong currencies, investors can still find attractive coupons in developed markets, including higher-yielding sovereign bonds, such as UK gilts. Convertible bonds should offer some of the highest expected returns. These consist of a bond with an embedded equity call option. This structure can provide some protection against corrections, thanks to the bond component, but still allows investors to participate in equity upside and benefit from positive exposure to higher volatility.
Outlook for Swiss real estate funds
For Swiss investors, real estate funds continue to offer attractive alternative sources of income. Alongside unlisted assets and commodities, they can strengthen diversification within a portfolio.
FX: selected value in undervalued currencies
Finally, when it comes to the foreign exchange rate market, the Swiss franc should remain steady against the euro and appreciate against the US dollar. Meanwhile, the Japanese yen, Chinese renminbi and Swedish krona are among the most undervalued currencies and may strengthen over the course of the year.
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