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Δ Overweight ∇ Underweight — Neutral

Equity – at a glance    Δ

12 DECEMBER 2025

We remain Overweight global equities, with a preference for US and Asia ex-Japan (AxJ) equities. US equity resilience continues to drive global equity performance, supported by a robust fundamental backdrop, including strong earnings growth, receding geopolitical risks and an accommodative Fed policy, which bolster the case for a soft landing in the US economy.

We project Asia ex-Japan (AxJ) equities to deliver the highest earnings growth among major regions over the next 12 months. We upgrade Indian equities to Overweight, and we add India large and mid-caps as opportunistic ideas, on the back of a recovery in earnings, strong structural growth and less-demanding valuations vs. a year ago spurring foreign investor interest. We also expect Chinese equities to outperform within AxJ. Chinese equities stand to benefit from enhanced corporate governance and targeted policy support for technology and innovation. We downgrade Europe ex

UK equities and Japan to Underweight. While fiscal stimulus is likely to accelerate in Germany, the strong EUR is hurting European exporters. Japan’s escalating geopolitical tensions with China and a subdued earnings outlook, against a stronger JPY projection, outweigh improving corporate governance reforms. We also remain Underweight UK equities, reflecting the market’s low exposure to growth sectors.

North America equities – Core holding     Δ

12 DECEMBER 2025

The Bullish Case:

+ Earnings growth

+ AI uptrend

The Bearish Case:

– Valuations

– US trade policy uncertainty

Europe ex-UK equities – Core holding     ∇

12 DECEMBER 2025

The Bullish Case:

+ German fiscal spending

The Bearish Case:

– US trade policy risks

– Stretched valuations

– Weak French growth

UK equities – Less Preferred holding     ∇

12 DECEMBER 2025

The Bullish Case:

+ Attractive valuations

The Bearish Case:

– Stagflation risks

– Economic growth challenges

Japan Equities – Core holding     ∇

12 DECEMBER 2025

The Bullish Case:

+ Dividends/share buybacks

The Bearish Case:

– JPY strength

– US trade policy

– Rising valuation

Asia ex-Japan equities – Preferred holding     Δ

12 DECEMBER 2025

The Bullish Case:

+ Earnings; India growth

+ China policy support

The Bearish Case:

– China growth concerns

– US trade policy

Δ Overweight     ∇ Underweight    — Neutral

Bonds – at a glance     Δ

12 DECEMBER 2025

Foundation: We view global bonds as a core holding. We have a relative preference for government bonds over corporate bonds (‘rates’ over ‘credit’) given still-attractive nominal yields, which stands out against expensive corporate bond valuations.

We prefer Emerging Market (EM) over Developed Market (DM) bonds. We are Overweight both EM USD government bonds and EM local currency (LCY) government bonds, driven by expectations of benign EM inflation, dovish monetary policy settings, fiscal improvements and a weak USD. Within DM bonds, we are Underweight both Investment Grade (IG) and High Yield (HY) corporate bonds.

In the US, we anticipate short-term yields will decline more than long-term yields due Fed rate cuts to 3.00% by end-2026, resulting in a steeper yield curve (ie, wider gap between long- and short-maturity yields). Uncertainty related to the US fiscal burden, inflation and Fed independence after a new Chair takes office risk bond volatility. However, we would use any resulting yield rebound to lock in higher absolute yields to hedge against the risk of ever-lower cash yields. We see US 10-year government bond yields above 4.25% as attractive since we expect it to ease to the 3.75%- 4.00% range over the next 6-12 months. We see 5-7-year bond maturities offering the most attractive balance between higher yields and managing fiscal and inflation risks.

Opportunistic ideas: We are bullish (i) European bank AT1 bonds (CoCos¹; FX-hedged), (ii) AAA-rated Collateralised Loan Obligation (CLO), (iii) US TIPS bonds, (iv) short-duration US HY bonds, and (v) Asia IG USD bonds.

Developed Market Investment Grade government bonds – Core holding     —

12 DECEMBER 2025

The Bullish Case:

+ High credit quality

+ Falling yields

The Bearish Case:

– High sensitivity to inflation

– Monetary policy

Developed Market Investment Grade corporate bonds – Less Preferred holding     ∇

12 DECEMBER 2025

The Bullish Case:

+ High credit quality

+ Benefit from falling yields

The Bearish Case:

– Elevated valuations

Developed Market High Yield corporate bonds – Core holding    ∇

12 DECEMBER 2025

+ Attractive yield

+ Low rate sensitivity

The Bearish Case:

– Elevated valuations

– Sensitive to growth

Emerging Market USD government bonds – Core holding     Δ

12 DECEMBER 2025

The Bullish Case:

+ Attractive yield

+ Benefit from lower US rates

+ Credit quality

The Bearish Case:

– US trade policy risks

Emerging Market Local currency government bonds – Preferred holding     Δ

12 DECEMBER 2025

+ Attractive yield

+ Central bank rate cuts

+ Benefit from USD weakness

The Bearish Case:

– US trade policy risks

Asia USD bonds – Core holding   —

12 DECEMBER 2025

The Bullish Case:

+ Moderate yield

+ Low volatility

The Bearish Case:

– Sensitive to China growth

Δ Overweight     ∇ Underweight    — Neutral

Commodities – at a glance      Δ

12 DECEMBER 2025

• We remain Overweight gold, with 3- and 12-month price targets at USD 4,350/oz and USD 4,800/oz, respectively. Ongoing Emerging Market (EM) central bank demand and supportive macro conditions should sustain gold’s rally.
  
• We expect West Texas Intermediate (WTI) oil to remain around USD 61/bbl and USD 60/bbl over the next 3- and 12-month horizons, respectively. Excess supply should cap temporary rebounds in prices due to potential geopolitical risks.
  

Oil

12 DECEMBER 2025

Gold      Δ

12 DECEMBER 2025

The Bullish Case:

+ Portfolio hedge

+ Central bank demand

+ Falling real yields

The Bearish Case:

– Resilient USD

Δ Overweight     ∇ Underweight    — Neutral

Alternatives – at a glance     Δ

12 DECEMBER 2025

The Bullish Case:

+ Diversifier characteristics

The Bearish Case:

– Equity, corporate bond volatility

Δ Overweight     ∇ Underweight    — Neutral

Multi-Asset – at a glance     Δ

12 DECEMBER 2025

Our multi-asset income (MAI) strategy has remained resilient amid all the noise and turbulence in Q2 25, delivering 2.1% over the past 3 months, with solid performances from dividend-paying equities, High Yield (HY) bonds, Emerging Market (EM) Local Currency (LCY) bonds and sub-financials.

Our MAI strategy continues to deliver a steady yield of c. 5.7%, which remains attractive in the current rate environment. Over the next 6-12 months, we expect the Fed to resume interest rate cuts. Investors should look to lock in higher income, capitalising on yield spikes to benefit from attractive income and potential capital gains.

Under our base case of a US economic soft landing, we continue to see further upside in equities and thus remain comfortable in tilting slightly in favour of equities over fixed income. Our equity allocations are balanced between income-generating equities and traditional growth equities. Within fixed income, our expectation of a weaker USD supports our case for increased allocations into EM LCY bonds. Lastly, we expect US Agency Mortgage-Backed Securities (MBS) to continue to outperform Developed Market (DM) Investment Grade (IG) government bonds.