KGI 2026 Mid-Year Global Market Outlook: Beyond the Mist, First Light Appears

HONG KONG SAR - Media OutReach Newswire - 9 June 2026 - Today, KGI has released its 2026 Mid-Year Global Market Outlook, covering markets in the US, Mainland China, Hong Kong and Taiwan.

(From left) James Chu, Chairman at KGI Investment Advisory; James Wey, Head of International Wealth Management at KGI; Cusson Leung, Chief Investment Officer, International Wealth Management at KGI.

Amid US-Iran geopolitical tensions and persistent inflation, the US economy in 2H 2026 is projected to leverage AI investment to drive growth across sectors, even as the Federal Reserve holds rates steady, potentially pushing Treasury yields above 4.8%. Concurrently, mainland China and Hong Kong markets are undergoing a structural transition, with high-tech exports showing notable resilience. Against a backdrop of shifting macroeconomic policies in both nations, coupled with historically low valuations in China-Hong Kong equities, economic growth targets are expected to catalyze a market realignment.

Under this backdrop, we maintain the "LEAD" strategy for the second half of 2026:

1. Liquidity Shift
2. Earnings Focused
3. Adding Credit
4. Diversified Assets

James Wey, Head of International Wealth Management at KGI, says: "In a fragmented macroeconomic environment where interest rates are plateauing and traditional asset correlations are breaking down, investors cannot afford to sit on passive cash. Our 'LEAD' framework is an active, high-conviction playbook designed for this exact environment. By transitioning liquidity into the structural growth lifecycle of AI infrastructure and unlocking predictable, institutional-grade yields in highly rated corporate credit, we are helping clients construct resilient, multi-asset portfolios. True wealth management goes beyond vanilla advisory; it requires seamlessly mobilizing resources across our fixed income, asset management, and global markets capabilities to institutionalize how private wealth navigates macro realignments."

Macro & US Markets
The US economy should remain resilient in 2H26F. Although consumption faces headwinds from elevated oil prices and inflation resulting from the US-Iran war, investment is the current growth driver of the US economy, in particular AI‑driven capex, rather than the consumption seen in the past. As a result, the US economy has not seen the usual effects from a softening of consumer demand. Moreover, both the US and the global economy have become less dependent on crude oil, and with the US being a net oil exporter, its vulnerability to oil‑price shocks is greatly reduced compared to other economies. We therefore maintain our forecast for US GDP growth of 2.2% in 2026F.

In the eurozone, economic growth is soft amid ongoing energy price pressures and tightening credit conditions as a result of cautious policies. In Japan, domestic demand is losing steam, but external demand remains resilient, supported by the semiconductor sector. Inflation in Japan has yet to stabilize near the targeted level, prompting policymakers to maintain a steady and cautious approach toward normalization. In China, domestic demand and the property sector remain anemic. However, global AI investment is supporting external demand and emerging industries, mitigating the risk of a sharp economic slowdown.

With oil prices elevated and contributing to a rising CPI in the US, and as the unemployment rate is stable, the Federal Reserve (Fed) has kept policy rates unchanged over the past three FOMC meetings. We expect the Fed to keep interest rate changes on hold through the end of this year. That said, should medium‑to long‑term inflation expectations get out of control, or should wage growth pick up pace again, the Fed could face renewed pressure to raise interest rates.

As far as US stock markets are concerned, strong AI‑related capex and productivity gains have driven earnings upgrades, which now point to almost 20% YoY growth. As these benefits begin to spread beyond the tech sector, non-tech sectors will also be supported, resulting in extremely solid fundamentals. On the valuation front, although US 10‑year Treasury yields have risen alongside inflation expectations, increased profit margin has helped to keep equity risk premia at low levels. As a result, discount rates have been relatively stable, limiting the negative impact on stock valuations. Overall, with fundamentals being revised upward while valuation headwinds are contained, we raise our 2026F target for the S&P 500 index to 8,000 points.

Sector-wise, in addition to AI‑driven growth stocks, cyclical sectors benefiting from the spillover effects of AI are also likely to perform well, leading to a more diversified market boom. Regarding fixed income assets, as inflationary pressure rise and rate hike expectations intensify, US 10‑year Treasury yields could potentially rise to 4.8% or higher in 2Q-3Q26F. Investors are advised to engage medium‑and long‑term US Treasuries and investment‑grade US corporate bonds with higher credit ratings during periods of yield spikes. At the same time, given the deteriorating fundamentals of poorly-rated US issuers and their vulnerability to elevated oil prices, we advise against US high‑yield corporate bonds rated CCC/Caa or below.

James Chu, Chairman at KGI Investment Advisory, says: "Although the US economy continues to face pressure from higher oil prices and inflation, AI-related capital expenditure has become the primary growth driver, reducing the economy's reliance on consumer spending and energy demand while supporting resilience in both economic activity and corporate earnings. We maintain our 2026 US GDP growth forecast of 2.2% and raise our S&P 500 target to 8,000, as we expect the benefits of AI investment to continue spreading across a broader range of industries."

Mainland China and Hong Kong Markets
Market focus has shifted from "growth magnitude" to "policy and earnings visibility." Despite tepid PMIs, positive signals are emerging: easing deflation, narrowing housing price drops, recovering consumer confidence, and a robust trade surplus supporting the RMB despite U.S. tariffs. Bolstered by monetary easing, accelerating corporate profits, and RMB 1.3 trillion in special government bonds, China's economy is stabilizing. In this "tepid yet highly visible" environment, we recommend focusing on structural growth across four key themes:

Theme 1: U.S.-China Trade Volatility Offers Accumulation Opportunities
Tariff negotiations will peak between September and November. Initial aggressive tactics will likely yield to partial agreements, as full decoupling remains unfeasible. The resulting market volatility creates excellent long-term accumulation opportunities.

Theme 2: AI Monetization Highlights High-Tech and Robotics
With Q1 high-tech exports up 39.2% and AI token consumption surging, we favor downstream AI applications, cloud computing, and humanoid robotics. LLM-capable tech giants and core robotics manufacturers will be the primary beneficiaries.

Theme 3: Green Supply Chain Thrives Amid Energy Crisis
Geopolitics and elevated oil prices continue to drive global renewable energy demand. Avoid the saturated solar sector; instead, target wind energy for its expanding margins and tier-one lithium battery makers with next-gen technology and overseas growth.

Theme 4: State-Owned Banks Offer Defensive and Dividend Value
Slower rate cuts have eased net interest margin (NIM) pressures. Supported by economic stabilization and falling NPL ratios, large state-owned banks with high CET1 ratios and growing non-interest income are poised for robust earnings recovery.

Cusson Leung, Chief Investment Officer, International Wealth Management at KGI, says: "As China's economy bottoms out, investors should capitalize on four core opportunities driven by policy support and easing deflation: (1) Accumulate during trade negotiation volatility, (2) Invest in AI-driven tech giants and robotics innovators, (3) Favor wind energy and lithium battery leaders over solar, (4) Leverage large state-owned banks for defensive yield. In summary, investors should utilize "technological innovation" and "green energy" as growth engines, anchored by "stable financials" to navigate volatility and achieve resilient returns."

Taiwan Market
Benefiting from the continued acceleration of the AI infrastructure race and upward revisions to supply chain earnings momentum, we currently set our peak target for Taiex at 50,000 points this year, implying approximately 25% upside from current levels. This target is derived based on a 21x forward P/E multiple on next year's earnings.

Taiex has delivered strong performance year-to-date, particularly since April. Despite rising geopolitical risks in the Middle East and potential supply disruptions in the Strait of Hormuz, the market has demonstrated notable resilience. The key driver behind this strength lies in the AI supercycle, which has effectively overshadowed short-term negative factors and supported market sentiment.

The latest global technology earnings season reinforces a critical message: AI is no longer merely a valuation narrative, but has evolved into a tangible driver of corporate earnings growth and capital expenditure expansion. For Taiwan's supply chain, as AI applications extend from the cloud to edge devices and agentic AI, major cloud service providers (CSPs) are facing increasingly urgent compute demand, leading to broad-based upward revisions in capex guidance during this earnings cycle.

Supported by continued order expansion, earnings expectations for Taiwanese corporates have been revised upward accordingly. We now forecast overall Taiwan market earnings growth of 40% this year, significantly higher than our earlier estimate of 20% at the start of the year and 30% prior to the earnings season. Despite the high base, earnings growth is expected to remain solid at around 25% next year, suggesting the AI-driven earnings cycle remains durable.

Overall, we maintain a positive view on Taiex, with the structural bull trend intact. However, in the near term, two key risks warrant attention: first, escalating geopolitical tensions may push up oil prices and disrupt market confidence; second, any resurgence in inflation could alter the Federal Reserve's policy trajectory. Given that Taiex are currently trading at elevated levels, a materialization of these risks could lead to increased volatility and potential technical corrections.

James Chu, Chairman at KGI Investment Advisory, says: "Driven by the surge in computing demand from the rise of agentic AI applications, global computing capacity remains in a clear state of undersupply. Major cloud service providers continue to raise capital expenditure, further driving upward revisions to earnings expectations across the AI infrastructure supply chain. At the same time, spillover effects from capacity constraints are broadening the range of beneficiaries. This AI investment cycle-driven bull market in Taiwanese equities represents a structural growth trend, rather than a traditional consumer electronics replacement cycle, and is likely to extend through 2027."

Hashtag: #KGI #MarketOutlook

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Developer of Masar Destination announces 2026–2030 roadmap and secures 1.2mn sq m Masar Gardens award — signaling a structural shift from single-asset operator to multi-city development platform in the western region

MAKKAH, SAUDI ARABIA - Media OutReach Newswire - 9 June 2026 - Umm Al Qura for Development & Construction has drawn a sharp line under one chapter of its corporate history and opened another, announcing a new five-year strategy and, in the same breath, securing the development rights to a 1.2 million square metre site adjacent to its flagship Masar Destination in Makkah — a juxtaposition that appeared carefully choreographed to demonstrate that the new plan was already in motion before the ink on it had dried.

The company, which owns, develops, and operates Masar Destination and has been listed on the Saudi Exchange (Tadawul) since completing its institutional transformation over the previous strategy cycle, said on Tuesday that its 2026–2030 plan marks a transition from managing a single flagship project to operating what it described as a "multi-destination urban development platform" across Makkah, Madinah, and Jeddah.

The new site — awarded to a consortium of Umm Al Qura, Makkah Construction and Development Company, and Rajhi United Real Estate Company — will be developed under the name Masar Gardens and encompass the Hindawiya West and Hindawiya South plots. The choice of branding is deliberate: by extending the Masar name to an adjacent precinct rather than launching a standalone product, the company is signaling that its expansion logic begins with deepening what already exists before it spreads outward.

>60% compound annual revenue growth, 2021–2026
>45% compound annual net profit growth
SAR 2bn+ operating cash flow, most recent fiscal year
SAR 40bn development investment attracted to Masar Destination
30+ strategic partnerships forged
SAR 50bn+ targeted new development pipeline, 2026–2030
SAR 3–5bn incremental capital to be deployed over the strategy period

The financial backdrop to the announcement is striking. Over the five years to 2026, Umm Al Qura posted compound annual revenue growth of more than 60 per cent and net profit growth exceeding 45 per cent, while generating operating cash flows of over SAR 2 billion in its most recent fiscal year. Those are numbers that, in most markets, would attract a longer queue of investors than the company would need — and indeed, it reports attracting approximately SAR 40 billion in total development investment to Masar Destination over the period, alongside more than 30 strategic partnerships.

The question that the 2026–2030 strategy must answer is whether a management team that built one destination on time and on budget can simultaneously direct a portfolio of projects across three cities while maintaining the operational discipline that generated those returns. It is, by any measure, a more complex undertaking — and the company's chosen answer is structural.

The strategy adopts what the company terms a "flexible operating model," enabling it to function either as master developer or as partner and development manager depending on project-specific investment criteria. This architecture — in which Umm Al Qura deploys expertise and brand as much as balance-sheet capital — is central to understanding why it believes it can manage a SAR 50 billion-plus development portfolio while committing only SAR 3–5 billion of incremental capital over the strategy period. The mathematics only work if co-investors and consortium partners carry a substantial share of project-level financing, which places premium value on the company's governance framework, track record, and institutional relationships.

Yasser Abdulaziz Abuateek, chief executive, framed the moment in terms of sequencing rather than scale alone. "The launch of our new strategy represents a pivotal turning point," he said, "as we move from a phase of capability building to one of considered expansion." The word "considered" appeared to be doing some deliberate work: a reminder, perhaps, that the strategy is explicitly not designed to maximize the number of projects, but to concentrate development activity within a geographically coherent and operationally integrated footprint.

That geographic logic — a tight focus on the western region — is one of the strategy's more analytically interesting features. Makkah, Madinah, and Jeddah together constitute a demand catchment unlike any other in the Kingdom: structurally underpinned by the Hajj and Umrah pilgrimage economy, the subject of sustained Vision 2030-aligned public investment, and the locus of the country's most significant cultural and commercial infrastructure. For a company whose institutional identity is inseparable from Makkah, the western region is not a constraint but a concentration of competitive advantage.

The company also reaffirmed that Masar Destination would remain the "central cornerstone" of its portfolio, with development of approved extensions continuing in parallel with new initiatives. For investors, that commitment matters: it confirms that the platform expansion is additive rather than a dilution of the asset that underpins the company's listed value, and that management is not proposing to harvest the flagship in order to fund growth elsewhere.

The strategy's formal alignment with Vision 2030 objectives — which the company cited explicitly in connection with enhancing quality of life, stimulating investment, and strengthening economic integration — positions Umm Al Qura as a natural counterparty for government-adjacent development mandates across its target cities. In a market where the allocation of major urban development sites is closely connected to institutional credibility and track record, that positioning carries tangible commercial value.

What the strategy does not offer, at least in its public articulation, is a timeline for when the new destinations beyond Masar Gardens will be identified, announced, or initiated. The company's language — "planned and selective expansion" in the service of "sustainable value" — suggests a deliberate pace that prioritizes return quality over speed of deployment. Whether that restraint holds as opportunities emerge will be among the more closely watched questions in Saudi real estate development over the coming years.

Further information: www.ummalqura.com.sa/en/new-strategy-2030

Hashtag: #Development #SaudiArabia

https://www.ummalqura.com.sa/en

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Masar Gardens