MID-YEAR OUTLOOK | 2026Promise and Pressure

The closure of the Strait of Hormuz has been one of the most apparent consequences of global fragmentation to start 2026. Instead of viewing conflicts in the Middle East as isolated shocks, they might be better contextualized as a continuation of several trends that investors have been monitoring in recent years. Global decision-makers are moving away from a focus on efficiency and lower costs toward domestic resilience and security at a time when access to energy, safe trade routes and critical materials can no longer be assumed. The world has become a more dislocated place, and policymakers’ reactions are driving markets and economies. In this era of fragmentation, diversification across regions and sectors continues to be vital to manage risk and capture growth.

AI adoption continues to accelerate and show signs of improving productivity, with the potential to support stronger revenues and wider margins over time. As the investment cycle extends beyond headline companies to the infrastructure behind AI, investors should focus on identifying leaders and smart adopters while remaining conscious that disruption will have consequences. Exposure to AI is increasingly essential for long-term growth, but selectivity and ongoing vigilance are key to navigating this evolving opportunity.