Bank of Singapore Looks Beyond 2026
2026 isn’t about rupture – it’s about reset. Bank of Singapore’s latest global outlook flags resilient growth, more favorable financial conditions, and a steady rebalancing of economic power. For investors, the edge won’t come from chasing beta, but from building for a structurally different cycle.
One of the most consequential shifts highlighted in the Bank of Singapore's outlook 2026, unveiled last Thursday, is a sustained downtrend in the US dollar. Persistent twin deficits and concerns over institutional credibility are prompting investors to reassess US risks, reducing the currency’s appeal as a safe haven.
In this environment, gold continues to play a strategic role. The metal has rallied strongly on safe-haven demand and is expected to stay supported as geopolitical tensions linger.
Energy markets, by contrast, are projected to remain well supplied, keeping oil prices relatively low despite ongoing conflicts and the structural transition toward green energy. Bank of Singapore (BoS) is a wholly-owned private banking subsidiary of OCBC, Southeast Asia's second-largest financial services group by assets.
Asia’s Structural Edge
If there is one region that stands out in the 2026 narrative, it is Asia. Lower interest rates, a softer dollar, and supportive fiscal policies are creating powerful tailwinds for Asian equities, particularly outside Japan. Beyond cyclical support, the region’s structural strengths are increasingly evident.
Asia dominates global clean energy manufacturing, from solar and wind components to lithium-ion batteries, and is rapidly building out the infrastructure that underpins the AI ecosystem, including data centres, power networks, and advanced semiconductors. As the report notes, «Asia’s growth will be buoyed by advances in technology and sustainability», reinforcing its appeal as a long-term allocation.
AI – From Hype to Monetisation
While questions persist over whether AI is overvalued, the outlook suggests the theme remains underestimated in its breadth and duration. Mega-cap technology firms continue to deliver resilient earnings, and capital expenditure by US hyperscalers is still surging to meet AI-driven demand.
More importantly, monetisation is gradually taking shape, moving the narrative beyond speculative enthusiasm toward tangible cash flows. For investors, the opportunity set extends well beyond headline names, encompassing underappreciated suppliers across hardware, software, energy, and real estate, particularly in Asia.
Rethinking Resilience
A central message of the presentation last Thursday at Marina Bay Sands Expo & Convention Centre and led by Global CIO Jean Chia, was the need to move beyond traditional, benchmark-heavy asset allocation. In a multi-polar world characterised by frequent shocks, portfolios overly concentrated in a narrow set of US equities and dollar exposure are increasingly vulnerable.
BoS advocates a «whole portfolio resilience» approach, combining diversified regional equity exposure, selective fixed income, alternatives, and non-USD assets.
Empirically, such robust portfolios have shown greater resilience during drawdowns, outperforming when diversification matters more than raw market exposure.
Alternatives and Active Management Take Center Stage
As the macro cycle matures, alternatives are expected to play a more prominent role. Private equity is seeing a gradual recovery in exits, private credit favours higher-quality senior exposures, and hedge funds benefit from dispersion and volatility.
Infrastructure and real assets remain supported by long-term themes such as digitalisation and energy transition.
Overlaying these allocations, active risk management – through rebalancing, income diversification, and careful control of concentration risk – becomes essential to navigating an environment where leadership rotates more frequently.
Changing World
The defining challenge of 2026 is not forecasting the next shock, but building portfolios that can absorb shocks while capturing structural opportunities.
With central banks easing, Asia rising, AI reshaping industries, and the dollar losing some of its dominance, investors are being asked to rethink old assumptions.
The message from Bank of Singapore is clear: stay invested, but do so with resilience, diversification, and a keen eye on the forces that are bridging worlds beyond 2026.
