Investment Weekly 6 November 2026

HSBC expects market leadership to broaden as strong profits, AI investment spillovers and resilient emerging markets offset higher rates, energy risks and geopolitical uncertainty.

• The S&P 500 is on track for a third consecutive quarter of earnings growth above 25%, while forward earnings have outpaced prices in 2026 and driven a valuation de-rating.
• Mega-cap earnings momentum is slowing relative to expectations, while cash and short-duration bonds yield around 5%, increasing the opportunity cost of holding equities.
• A Democratic sweep of both US congressional chambers could support stocks through reduced election uncertainty, although a potential mid-December shutdown, energy costs and AI regulation remain risks.
• The JPMorgan GBI-EM Global Diversified Index has stayed roughly flat over six months, and emerging-market local bonds have recorded slight average gains during global equity sell-offs since 2024.
• Japanese investors bought a net ¥18.8 trillion of JGBs in April-September, while October's 20-year auction attracted bids nearly six times the competitive allocation.

Takeaway: HSBC favours cautious pro-risk positioning, with growth exposure in lower-valued Asia and emerging markets, selective emerging-market debt, quality credit and a broader equity allocation across sectors and regions.