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Δ Overweight ∇ Underweight — Neutral

Equity – at a glance    Δ

31 OCTOBER 2025

We retain our Overweight allocation to global equities, supported by receding geopolitical risks and a resilient fundamental backdrop. Our preferred regions are Asia ex-Japan and the US. A robust US Q3 earnings season and increasingly accommodative Fed policy both support a soft landing in the US economy.

We expect Asia ex-Japan to deliver the highest earnings growth among major regions over the next 12 months. We prefer China equities within the region, supported by the government’s Fourth Plenum commitments to achieve high-quality growth by increasing services consumption and strengthening its science and technology sector.

We maintain a Core allocation to Japan equities as fading political uncertainties and potential fiscal expansion are likely to be offset by lagging earnings growth projections. We upgrade Europe ex-UK to a Core holding, given attractive valuations and fading political risks. We are staying Underweight UK equities as the lack of exposure to technology and growth sectors compared to global equities is likely to weigh on their relative performance. The UK also has a relatively vulnerable fiscal position.

North America equities – Core holding     Δ

31 OCTOBER 2025

The Bullish Case:

+ Earnings growth

+ AI uptrend

The Bearish Case:

– Valuations

– US trade policy uncertainty

Europe ex-UK equities – Core holding     —

31 OCTOBER 2025

The Bullish Case:

+ Inexpensive valuations

+ German fiscal spending

The Bearish Case:

– US trade policy risks

UK equities – Less Preferred holding     ∇

31 OCTOBER 2025

The Bullish Case:

+ Attractive valuations

+ dividend yield

The Bearish Case:

– Stagflation risks

– US trade policy risks

Japan Equities – Core holding     —

31 OCTOBER 2025

The Bullish Case:

+ Reasonable valuations

+ rising dividends/share buybacks

The Bearish Case:

– JPY strength

– US trade policy

Asia ex-Japan equities – Preferred holding     Δ

31 OCTOBER 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     —

31 OCTOBER 2025

Foundation: We have reduced global bonds in our overall allocation to Underweight. This is implemented by a lowering corporate bonds (‘credits’) to an Underweight allocation, while government bonds (‘rates’) remain a Core allocation.

In an environment of elevated valuations across equities and corporate bonds, we prefer the relatively less constrained upside opportunities in equities, compared with corporate bonds. This underpins our Underweight on Developed Market (DM) Investment Grade (IG) corporate and High Yield (HY) in our foundation asset allocation. Given elevated valuations in credits, we find relative valuations in government bonds more attractive. In USD-denominated bonds, we anticipate short-term yields to decline more than long-term yields, driven by an expected lowering of the Fed Funds rate to 3% by end 2026 2 . We expect rates volatility to rebound from the recent trough due to uncertainties surrounding the US fiscal outlook, tariffs and Fed independence. We view increases in long-term yields as transitory and opportunities to lock in still-high absolute yields. We forecast the US 10-year government bond yield to range between 3.75% and 4.00% over the next 12 months. Bonds with five- to seven-year maturities offer the most attractive balance between yields and fiscal and inflation risks.

We maintain an Overweight view on Emerging Market (EM) local currency (LCY) government bonds, driven by benign local inflation, dovish monetary policy outlook, improvements in fiscal positions and our expectation of a weak USD.

Opportunistic ideas: We initiate a bullish Asia USD IG bonds idea, expecting the strong year-to-date performance to extend, driven by strong fundamentals, favourable technical dynamics and fund inflows. We remain bullish on US Treasury Inflation-Protected Securities (TIPS) and short-duration US HY bonds. We take profit and close our bullish view on UK government bonds (FX-unhedged). We expect that volatility in Gilts and GBP will rise as we approach the budget release in end-November.

Developed Market Investment Grade government bonds – Core holding     —

31 OCTOBER 2025

The Bullish Case:

+ High credit quality

+ Attractive yields

The Bearish Case:

– High sensitivity to inflation

– Monetary policy

Developed Market Investment Grade corporate bonds – Less Preferred holding     ∇

31 OCTOBER 2025

The Bullish Case:

+ High credit quality

+ sensitive to falling yields

The Bearish Case:

– Elevated valuations

Developed Market High Yield corporate bonds – Core holding    ∇

31 OCTOBER 2025

+ Attractive yield

+ Low rate sensitivity

The Bearish Case:

– Elevated valuations

– Sensitive to growth

Emerging Market USD government bonds – Core holding     —

31 OCTOBER 2025

The Bullish Case:

+ Attractive yield

+ Sensitive to US rates

The Bearish Case:

– EM credit quality

– US trade policy risks

Emerging Market Local currency government bonds – Preferred holding     Δ

31 OCTOBER 2025

+ Attractive yield

+ central bank rate cuts

+ Benefit from USD weakness

The Bearish Case:

– US trade policy risks

Asia USD bonds – Core holding   —

31 OCTOBER 2025

The Bullish Case:

+ Moderate yield

+ Low volatility

The Bearish Case:

– Sensitive to China growth

Δ Overweight     ∇ Underweight    — Neutral

Commodities – at a glance

31 OCTOBER 2025

• We raise our 3- and 12-month gold price targets to USD 4,300/oz and USD 4,500/oz, respectively. We remain constructive on gold, maintaining our Overweight. Under-allocated investors can consider adding at USD 3945-4060/oz.
  
• We expect West Texas Intermediate (WTI) oil to remain around USD 60/bbl and USD 63/bbl over the next 3- and 12-month horizons, respectively. Excess supply continues to be the dominant factor that should cap temporary rebounds in prices due to potential geopolitical risks.
  

Oil

31 OCTOBER 2025

Gold      Δ

31 OCTOBER 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     —

31 OCTOBER 2025

The Bullish Case:

+ Diversifier characteristics

The Bearish Case:

– Equity, corporate bond volatility

Δ Overweight     ∇ Underweight    — Neutral

Multi-Asset – at a glance

31 OCTOBER 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.