iFAST Investment Outlook 4Q 2026: The AI supercycle meets a higher-for-longer world

The Middle East conflict has widened. Higher-for-longer interest rates are here to stay.

A ceasefire in the Middle East calmed markets in August. Since then, the conflict hasn't de-escalated — it has widened to a second chokepoint. Should your portfolio still be betting on resolution?

We don't think so. The Strait of Hormuz was the original flashpoint, but the Houthi movement has since taken effective control of Bab el-Mandeb, the other route for oil moving between the Gulf and Europe or Asia — a strait that carried about 7% of global oil output as recently as June. Days later, drones struck Saudi Arabia's East-West pipeline, the workaround that lets Saudi crude bypass Hormuz entirely, forcing a shutdown on 11 September.

That pipeline is back — loadings at Yanbu resumed late September, and Middle East crude exports are now back to just under 80% of pre-conflict levels, which on the surface looks like the all-clear. But crude was never the binding constraint — refining capacity was, and that hasn't changed. US refiners are already running at near full capacity, 98% utilisation in late August, the highest since 2018. Diesel crack spreads have nearly tripled since the war began, to over USD 105 a barrel, and US retail diesel has crossed USD 6 a gallon for the first time. The crude bottleneck may be easing, but the refining bottleneck certainly hasn't.

Figure 1: The bottleneck is in refining, not crude

Oil isn't the only channel pushing prices up. Food costs are at a three-year high, and memory chips are adding an estimated USD 375 a year to the average US household's bill. That's why the Fed hiked rates on 16 September, unanimously, for the first time since 2023 — while the ECB, Bank of Japan and MAS have all tightened this year for the same stated reason. Long-term yields don't rise together, in lockstep, across major economies, unless something structural is going on.

Here's why that matters for your money: a dollar of profit earned today is worth more than a dollar earned a decade from now, and rising rates widen that gap further. Asian equities offer comparable earnings growth to the S&P 500 at a meaningful discount — you're getting the growth without paying up for it. That's why we're sticking with our call: own more Asia, less US, and keep bond duration short.

Table 1: Market Attractiveness Summary

Region / Sector	Rating	Stance	Key Theme
Asia Semiconductors	4.5 Stars "Very Attractive"	Overweight	Memory and AI hardware demand under multi-year contract; supply constrained through 2027
South Korea	4.0 Stars "Very Attractive"	Overweight	Memory cycle continuing with record profitability; AI data-centre build-out adds a second demand channel
Taiwan	4.0 Stars "Very Attractive"	Overweight	Earnings caught up with the index; TSMC pricing power and 2027 orders already signed
Asia ex-Japan	4.0 Stars "Very Attractive"	Overweight	Technology-led growth story remains intact; valuations attractive post-correction
Emerging Markets	4.0 Stars "Very Attractive"	Overweight	Broadening tech-led earnings growth; valuations near one standard deviation below average
Singapore	4.0 Stars "Very Attractive"	Overweight	Broadening AI-led electronics upcycle; reforms supporting buybacks and listings
China Internet	3.5 Stars "Attractive"	Overweight	Platform earnings recovering as index tilts toward AI; re-rating takes time
Digital Economy (Semis)	3.5 Stars "Attractive"	Overweight	Upgraded as broadening AI earnings guidance outweighs valuation; supercycle is structural
Digital Economy (Internet)	3.5 Stars "Attractive"	Overweight	AI-led growth intact; time to be more selective on software winners
China	3.5 Stars "Attractive"	Overweight	K-shaped economy: AI/semiconductors the structural engine, traditional demand still adjusting
Hong Kong	3.5 Stars "Attractive"	Overweight	China re-rating feeding through; resilience continuing on mainland strength
Malaysia	3.0 Stars "Attractive"	Overweight	Data-centre EPCC and grid capex anchor near-term earnings visibility
Japan	3.0 Stars "Attractive"	Overweight	BOJ tightening on track; corporate reform and earnings resilience support large caps
Healthcare	2.5 Stars "Neutral"	Neutral	Opportunities and risks balanced; earnings rebound expected in 2027
US	2.0 Stars "Not Attractive"	Underweight	Strong earnings but rich valuation versus Asia; selective on digital economy and quality names
Europe	2.0 Stars "Not Attractive"	Underweight	Growth proving resilient, but conflict and energy prices keep rating capped
ASEAN	2.0 Stars "Not Attractive"	Underweight	Selectivity remains key; Singapore and Malaysia doing the heavy lifting
Global Financials	2.0 Stars "Not Attractive"	Underweight	Bank catalyst maturing; matured NIM limits upside despite healthy credit
India	2.0 Stars "Not Attractive"	Underweight	Least positive within Asia ex-Japan & EM

Asia offers comparable growth to the US, at roughly half the price

That's exactly the trade that we're recommending this quarter. Asia ex-Japan trades at roughly 15x next year's expected earnings and Emerging Markets at roughly 14x, against profit growth of around 42-43% — while the US is priced at an 87% premium for comparable growth. That gap is why we're upgrading both markets to 4.0 Stars “Very Attractive”.

Much of that growth traces back to the same AI buildout powering our semiconductor call. Samsung's high-bandwidth memory capacity is fully booked for 2026, with 2027 orders already landing, and advanced packaging capacity at TSMC remains tight even as it races to expand — a second bottleneck stacked on top of the first. China is building its own domestic AI infrastructure too, and the effect is broadening: industrial and materials earnings were up 25% year-on-year last quarter.

While Singapore has also benefitted from robust global chip demand — July electronics output grew 11.2% year-on-year — the market has a second profit engine: industrials have overtaken S-REITs as the index's second-largest sector, driven by ST Engineering and Yangzijiang Shipbuilding's order books and Keppel's growing recurring income. India is the exception: earnings are up 7.7%, but with little AI exposure and a weakening rupee pushing inflation above target, better earnings aren't enough — it stays our least preferred market in the region.

To be clear, this isn't a call to abandon the US. It remains the world's largest equity market with genuinely strong earnings. But at the index level, the price doesn't justify a full allocation — so we stay underweight overall, selective on quality over unprofitable growth stories. In bonds, the same logic favours the short end of the curve.

Table 2: MSCI Asia ex Japan Index — Valuation Summary

MSCI Asia ex-Japan Index	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	21.5	15.1	12.4	11.1
Earnings Growth	10.3%	42.0%	22.0%	12.0%
EPS	54.0	76.6	93.5	104.7
Dividend Yield	1.7%	2.1%	2.3%	2.4%
Target Price (USD) (Based on fair PE ratio of 14.5X)				1,518
Upside Potential				30.8%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 23 Sep 2026.

Figure 2: MSCI Asia ex Japan Index — Share Price and EPS

Table 3: MSCI Emerging Market Index — Valuation Summary

MSCI Emerging Market Index	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	20.4	14.0	12.1	10.7
Earnings Growth	8.6%	43.2%	15.6%	13.5%
EPS	87.1	124.7	144.2	163.6
Dividend Yield	1.8%	2.0%	2.0%	2.2%
Target Price (USD) (Based on fair PE ratio of 13.5X)				2,209
Upside Potential				26.3%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 23 Sep 2026.

Figure 3: MSCI Emerging Market Index — Share Price and EPS

Figure 4: FactSet Asia Semi Index — Share Price and EPS

Korea's chip exports just hit a record. Its AI story is about to get bigger.

Korea's memory makers just posted numbers that speak for themselves. SK Hynix's revenue grew 256.8% year-on-year last quarter, and Samsung's semiconductor operating margin jumped more than eighteenfold as its chip revenue share rose to 74.3%. Together, the two companies now control 83% of the global market for the high-bandwidth memory chips that AI systems depend on.

What makes this quarter different is that Korea is no longer just supplying the AI boom from the outside — it is building its own demand for it. The country has a national pipeline of AI data-centre projects scaling toward a possible 18.4 gigawatts of capacity by 2035, and these are not vague plans: SK Group has construction underway across three regions targeting 5 gigawatts by 2029, Naver is building an NVIDIA-powered data centre in Sejong that scales from 55 megawatts to 200 megawatts by 2028, and LG Uplus has board-approved a second phase of its Paju facility. Every one of those projects is, in effect, a direct, named order for more Korean-made memory.

South Korea's presidential office disclosed in July that Samsung and SK Hynix would supply US tech companies, including Nvidia, under agreements worth a reported USD 950 billion — and the country's exports just posted their 16th straight month of growth, up 83.5% year-on-year in September to a record USD 120.9 billion, with chip exports alone up 262.8% to USD 60.3 billion.

We reiterate our Very Attractive rating on South Korea. On our estimates, the KOSPI Index offers approximately 54.8% upside to a fair value of KRW 10,958, based on a 13x PE multiple. Our preferred vehicles for this exposure are the LionGlobal Korea Fund SGD and the Franklin FTSE South Korea ETF (NYSE: FLKR).

Table 5: KOSPI Index — Valuation Summary

KOSPI Index	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	28.5	10.6	8.9	8.4
Earnings Growth	19.4%	167.2%	19.5%	6.1%
EPS	248.9	664.9	794.6	842.9
Dividend Yield	1.0%	2.5%	3.0%	3.2%
Target Price (KRW) (Based on fair PE ratio of 13X)				10,958
Potential Upside (%)				54.8%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 23 Sept 2026.

Figure 5: KOSPI Index — Share Price and EPS

Taiwan's earnings caught up with its stock price — not the other way around.

Did Taiwan's AI rally get ahead of itself? The numbers since our June upgrade say the opposite. Forward earnings per share are up roughly 20%, from 2,260 to 2,709, while the index itself has risen only 2% — the forward PE has actually compressed, from 20.6x to 17.4x. The re-rating we called for in June has been paid for by earnings, not a higher multiple.

That earnings growth is backed by hyperscalers who are now demonstrably profitable on their AI spending, not just promising to be. The top four US hyperscalers guided 2026 capex to USD 720-745 billion, roughly 80% higher than last year, and every one of them raised that guidance again after second-quarter results, with 2027 spending heading toward USD 1 trillion. Google Cloud CEO Thomas Kurian put a number on it: "Our payback period on AI servers in aggregate is less than two years, and on our own silicon is half that." Nvidia's own FY28 guidance of roughly 70% growth is, by CEO Jensen Huang's own account, a supply-constrained outlook — the real number would be higher if supply allowed.

TSMC is capturing that demand in its own numbers, not just order books. Revenue per wafer rose 15% year-on-year to USD 9,271, gross margin hit 67.7%, and the 5-10% price increases flagged in June were finalised in July for 2027. Its most advanced node, N2, is priced at roughly USD 30,000 a wafer and already booked through 2028.

Even companies looking for alternatives to TSMC still end up in Taiwan. CoWoS, the packaging technology nearly every AI chip needs, is sold out with a 78-week lead time — and the backup suppliers are still Taiwanese: PSMC, UMC, Unimicron, ASE, SPIL and Kinsus. TSMC itself has roughly 20 new facilities under construction and raised 2026 capex to USD 60-64 billion. Even Foxconn has been reshaped by this cycle — AI servers now make up 51% of its revenue, more than iPhones.

We reiterate our Very Attractive rating on Taiwan and raise our target price. On our estimates, the TWSE Index offers approximately 55.0% upside to a fair value of TWD 74,640, based on a 20x PE multiple. Our preferred vehicle for this exposure is the Franklin FTSE Taiwan ETF (NYSE: FLTW).

Table 6: TWSE Index — Valuation Summary

TWSE Index	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	32.2	20.9	15.7	12.9
Earnings Growth	—	54.5%	32.5%	22.0%
EPS	1,494.5	2,308.9	3,058.7	3,732.0
Dividend Yield	1.51%	1.99%	2.49%	2.89%
Target Price (TWD) (Based on fair PE ratio of 20X)				74,640
Upside Potential (%)				55.0%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 23 Sep 2026.

Figure 6: TWSE Index — Share Price and EPS

China's headline numbers are ugly. The AI story underneath them isn't.

China’s headline economic numbers are weak. Property investment fell 19.9% year-on-year, new construction starts dropped 24.8%, and retail sales grew just 0.4-1.1% — barely keeping pace with inflation. Fixed-asset investment contracted 7.2%, and the central bank left its benchmark lending rate unchanged.

On the surface, this looks like an economy losing momentum. It isn't the full picture. Underneath the property-driven weakness, a second economy is accelerating: high-tech manufacturing grew 16.7% year-on-year in August, industrial profits rose 17.6% between January and July, and new growth drivers now account for over 60% of industrial expansion. China isn't one AI trade. It's two — semiconductors and the internet platforms building on top of them — and both are still cheap.

Start with chips. Beijing has made self-sufficiency a national priority, backing it with a fiscal deficit held at 4% of GDP for a second year (RMB 5.89 trillion), including RMB 1.3 trillion of special bonds tilted toward technology rather than property. Export restrictions meant to slow this down appear to be accelerating it instead: CXMT is now the world's fourth-largest DRAM maker, YMTC holds over 10% of global NAND output, and IC exports rose 103.9% between January and August — now China's largest export category. China also holds an energy edge the US increasingly lacks, with installed power capacity up 11% to 4,080 gigawatts by July, versus congested US grid queues.

Table 7: CSI All-Share Info Tech Index — Valuation Summary

CSI All-Share Info Tech Index	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	68.0	49.7	40.4	33.7
Earnings Growth	45%	70%	23%	20%
EPS	0.69	1.16	1.43	1.72
Dividend Yield	—	—	—	—
Target Price (CNY) (Based on fair PE ratio of 55X)				17,224
Upside Potential				63.2%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 23 Sep 2026.

Figure 7: CSI All-Share Info Tech Index — Share Price and EPS

The second trade is China's internet platforms, where earnings are stabilising and the index itself is quietly turning into an AI play. Negative earnings revisions have narrowed sharply, subsidy wars in food delivery are easing, and cloud, advertising and AI agent monetisation are opening a new growth line. The index composition is shifting too — June's rebalance added MiniMax and Zhipu, with a further methodology revision from December set to broaden AI exposure. Earnings growth is projected to step up from roughly 3.2% this year to 10.5-11.0% in FY2027-28, while the index still trades at a historically low 16.9x forward earnings.

Table 8: Hang Seng Tech Index — Valuation Summary

Hang Seng Tech Index	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	17.1	16.9	15.3	13.8
Earnings Growth	2.8%	3.2%	10.5%	11.0%
EPS	251.5	259.6	286.8	318.4
Dividend Yield	2.2%	1.2%	1.3%	1.6%
Target Price (HKD) (Based on fair PE ratio of 22.5X)				7,164
Upside Potential (%)				63.6%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 23 Sep 2026.

Figure 8: Hang Seng Tech Index — Share Price and EPS

Figure 9: Straits Times Index — Share Price and EPS

Figure 11: Invesco NASDAQ Internet ETF — Share Price and EPS

Semiconductors: The earnings runway just got longer. Nvidia guides roughly 70% FY28 revenue growth even under supply constraints, and Broadcom expects AI revenue to double to USD115bn in FY27, then double again to USD230bn in FY28. The strength isn't confined to GPUs: Micron guides fourth-quarter revenue of USD50bn at a record ~86% gross margin, AMD expects server CPU revenue up over 80% in the second half of 2026 as agentic AI lifts processing needs, and TSMC — running at ~72.5% foundry share with key nodes fully utilised — has raised 2026 capex to USD60-64bn to keep pace with demand it still can't fully meet. Memory is tightening too, as AI inference and longer context windows push up chip content faster than new supply can come on.

Hyperscalers are underwriting all of it, with roughly USD800bn of 2026 spending flowing into GPUs, custom chips, foundry capacity and memory. That's why we're upgrading semiconductors to 3.5 Stars "Attractive": valuations have become more reasonable just as earnings guidance extends the growth runway — a rare combination. We stay positive across the supply chain, favouring Nvidia and Broadcom within fabless, Micron within memory, and ASML and Lam Research among equipment makers, whose lithography and etching tools capture the spending regardless of which chipmaker ultimately wins share.

Table 12: VanEck Semiconductor ETF — Valuation Summary

VanEck Semiconductor ETF	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	35.8	29.4	21.0	17.1
Earnings Growth	—	87.2%	40.3%	22.8%
EPS	446.8	836.3	1,173.4	1,441.1
Dividend Yield	0.7%	0.6%	0.7%	0.9%
Target Price (USD) (Based on fair PE ratio of 24X)				844
Potential Upside (%)				40%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 23 Sep 2026.

Figure 12: VanEck Semiconductor ETF — Share Price and EPS

We maintain our 2.0 Stars "Not Attractive" rating on US equities at the index level — the S&P 500 trades at a 92.6% premium to the MSCI Asia ex-Japan Index, well above its 10-year average of 48.2%, with target price USD 9,280 implying 20.4% upside — and continue to favour Taiwan and South Korea for comparable growth at better valuations.

Within the US, we like internet via Invesco NASDAQ Internet ETF (NASDAQ: PNQI) and semiconductors via VanEck Semiconductor ETF (NASDAQ: SMH), while favouring PineBridge US Large Cap Research Enhanced A USD or JPMorgan U.S. Quality Factor ETF (NYSE: JQUA) for broad, quality-tilted exposure.

The BOJ just hiked rates to a 30-year high. Here's why Japanese equities aren't flinching.

The BOJ raised its policy rate 25 basis points to 1.25% on 18 September — the highest since 1995 — but a dovish-leaning 7-2 vote saw the Nikkei gain on the news as the yen weakened to around 157.5. Underlying inflation still argues for more tightening: producer prices rose 7.6% year-on-year, and a record 4,923 food and beverage items are scheduled for September price hikes.

That's not the signal that matters most for equities, though. August chip exports rose 56.9% in value but just 4.5% in volume — meaning most of that gain came from higher prices, not more chips actually being made. Semiconductor equipment exports show the real picture: up 40.1% in value and 43.1% in volume, with volume growth accelerating from 36.2% in July — clear evidence that chipmakers are genuinely expanding capacity, which is what actually drives earnings at Tokyo Electron, SCREEN Holdings and Advantest.

Higher rates also create sector divergence: we favour financials, backed by ROE rising from 12.0% to 12.8% on capital efficiency, and stay selective on rate-sensitive real estate and SMIDs.

We maintain our 3.0 Stars rating on Japanese equities — Nikkei 225 offering 17.8% upside to JPY 77,180 — via Xtrackers Nikkei 225 UCITS ETF (LSE: XDJP) or Amova Japan Dividend Equity SGD for financials exposure, and BNP Paribas Japan Small Cap Classic Cap SGD for selective small-cap exposure.

Table 13: Nikkei 225 Index — Valuation Summary

Nikkei 225 Index	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	28.1	23.0	19.6	17.0
Earnings Growth	28.7%	22.5%	17.0%	15.7%
EPS	2,329	2,852	3,336	3,859
Dividend Yield	1.2%	1.5%	1.7%	1.9%
Target Price (JPY) (Based on fair PE ratio of 20X)				77,180
Upside Potential				17.8%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 24 Sep 2026. Each fiscal year ends 31 March. FY2026 refers to the 12-month period ended 31 March 2027.

Figure 13: Nikkei 225 Index — Share Price and EPS

Where we're staying cautious

Not every market earns space in our high-conviction list. Here's where we're staying on the sidelines, and why.

Europe (2.0 Stars "Not Attractive"). The economy held up better than feared — Q2 GDP stayed positive, and earnings broadened beyond energy — but inflation (3.2% in August) and ECB tightening keep squeezing households, and even with earnings upgrades, the STOXX 600's ~10% upside to FY2028 doesn't compete with Asia semiconductors on growth or valuation. We stay selective, limited to defence and infrastructure names with multi-year order visibility.

Table 14: STOXX 600 Index — Valuation Summary

STOXX 600 Index	FY2025	FY2026E	FY2027E	FY2028E
PE Ratio (x)	18.0	15.8	14.7	13.6
Earnings Growth	0.28%	13.29%	7.41%	8.05%
EPS	35.75	40.50	43.50	47.00
Dividend Yield	3.01%	3.16%	3.44%	3.74%
Target Price (EUR) (Based on fair PE ratio of 15x)				705
Potential Upside (%)				10%
Source: Bloomberg Finance L.P., iFAST Research Team. Data as of 23 Sep 2026.

Figure 14: STOXX 600 Index — Share Price and EPS

ASEAN (2.0 Stars "Not Attractive"). Singapore and Malaysia anchor the regional index and justify most of the conviction we do have here. Malaysia stands out as the one bright spot — we rate it 3.0 Stars "Attractive," with data-centre EPCC and grid capex anchoring near-term earnings, Budget 2027 in October set to ease financing costs further, and the KLCI50 expansion from 30 to 50 constituents broadening the index beyond its current bank concentration; we favour domestic infrastructure names — construction, utilities, renewable energy — over telcos and consumer discretionary.

Thailand's rally, by contrast, has run ahead of its earnings, and Indonesia's rupiah pressure is limiting policy support. Korea and Taiwan remain our preferred route to AI exposure; ASEAN's AI benefit stays concentrated in electronics manufacturing and data-centre construction rather than the chips themselves.

Global Financials (2.0 Stars "Not Attractive"). Bank NIMs are maturing, not expanding further, as deposit costs reprice as fast as earning-asset yields. The clearer growth pockets are narrower — investment banks on strong capital-markets activity, and life insurers on higher reinvestment yields — but that's not enough to upgrade the broad sector.

Healthcare (2.5 Stars "Neutral"). Innovation, M&A and GLP-1 demand continue to support pharma and biotech, but medtech remains the laggard, and policy risk around drug pricing and Medicaid/ACA coverage keeps the overall picture balanced rather than compelling.

India (2.0 Stars "Not Attractive") rounds out the list as our least preferred market in Asia/EM. Earnings momentum has actually improved — 2Q26 growth reached 7.7% year-on-year — but India has limited direct exposure to the AI infrastructure buildout, and renewed rupee pressure alongside inflation above the RBI's 4% target raises the risk of tighter policy just when growth needs support.

Fixed Income: Rates are staying higher for longer. EM debt is where we're pulling back.

Global rates look set to stay elevated. The Fed, ECB and BOJ have all already raised rates this quarter — the Fed to 3.75-4.00% on 16 September, the BOJ to 1.25% two days later — and further hikes remain on the table as sticky inflation, the Middle East conflict, fiscal unsustainability and escalating tariffs keep pressure elevated. We keep our preference for short-to-medium tenors (3-5 years) — short-end yields stay anchored, medium-term bonds offer the better pickup, and anything beyond 10 years suits trading over holding to maturity.

Within credit, we're sticking with higher-quality bonds rather than reaching for riskier ones. Investment-grade yields above 4% already offer decent pickup over government bonds, and there's little reward for going further down the risk spectrum — the extra yield from high-yield over investment-grade sits near 20-year lows (~300+ basis points below average), while investment-grade spreads stay tight versus history. We favour tech and hyperscaler bonds for their combination of yield and credit quality, and stay neutral and selective on high-yield, favouring issuers with strong balance sheets over weaker credits exposed to refinancing risk.

The real change this quarter is emerging market debt, which we're downgrading to Negative. Higher energy prices and potential El Niño-driven food inflation — a larger share of CPI in developing economies — threaten to stall the easing cycle that's driven EMD returns, and most EM central banks are no longer positioned to keep cutting. Spreads remain tight with little buffer against widening, and a more hawkish Fed raises the risk of broader risk-off sentiment: EMD has historically underperformed in hawkish Fed cycles, with the EMBI Global Diversified Index falling nearly 18% during 2022's tightening.

We maintain our preference for short-to-medium duration and Global IG bonds for diversified exposure, stay neutral and selective on high-yield, and downgrade EMD to Negative this quarter.

Gold's rally isn't about rate cuts anymore. Our Yuan and Euro views have changed too.

Gold surged to USD 4,563 by end-August — up 13%, its third-strongest month in 25 years — before easing to around USD 4,200 by end-September. The driver has shifted: this isn't a bet on falling rates anymore, it's safe-haven demand, a softening dollar, de-dollarisation flows and fiscal concerns. That matters because sentiment-driven demand can reverse as fast as it built, and the rate backdrop is actually working against gold — the Fed's hawkish 25-basis-point hike on 16 September, with core PCE stuck at 3.3-3.5% for four months, raises the opportunity cost of holding a zero-yielding asset just as cash and short-dated bonds pay real returns. Demand is diverging too: China's central bank has now bought gold for 22 straight months, while India's imports have fallen to a multi-year low after an import duty hike. We still see a role for gold as a portfolio diversifier given its low correlation to other assets — just a limited one.

We recommend a 0-10% portfolio allocation to gold as a diversifier only, via SPDR Gold MiniShares (NYSE: GLDM), with money-market funds and short-duration bonds as more dependable options for capital preservation.

Currencies tell a related story this quarter — central bank divergence, not safe-haven flows, is doing the driving. Two changes stand out. We've downgraded the Chinese yuan (CNH) to Neutral — its recent appreciation already reflects strong exports and rising CNH settlement usage, leaving less room to run, while the wide US-China rate differential and China's own efforts to manage the pace of appreciation (including rising USD deposit rates) cap further gains. We've upgraded the Euro (EUR) to Neutral — downside risks have eased as the ECB's tightening bias provides rate support and the growth outlook improves on defence and infrastructure spending, though a still-negative real yield gap keeps upside limited for now.

Table 15: Currency Views — September 2026

Currency	View (Jun '26)	View (Sep '26)
JPY	Slightly Positive	Slightly Positive
SGD	Positive	Positive
MYR	Neutral	Neutral
USD	Neutral	Neutral
HKD	Neutral	Neutral
CNH	Slightly Positive	Neutral ↓
AUD	Neutral	Neutral
EUR	Slightly Negative	Neutral ↑
CHF	Neutral	Neutral
GBP	Negative	Negative

What to do now

1. Stay overweight Asia. The region's AI-led earnings cycle remains our highest-conviction call, anchored by Asia Semiconductors, Korea and Taiwan, where the memory cycle and TSMC's pricing power still have room to run.

2. Within China, favour the two AI trades over the broad index. Semiconductors and internet platforms, while holding broad China exposure for the macro recovery still to come. Keep Singapore as a core, lower-volatility holding for both growth and income.

3. Stay underweight the US at the index level, but selective within it. The valuation premium to Asia is still too wide to justify broad exposure — but keep positions in internet and semiconductors, both upgraded or reaffirmed this quarter.

4. Turn more defensive in fixed income and gold. Stay short-to-medium duration and up in credit quality, exit emerging market debt following our downgrade to Negative, and keep gold to a 0-10% diversifier allocation rather than a core holding — the rally is now sentiment-driven, not rate-driven.

Our highest-conviction trade remains the same one that's carried this outlook all year: Asia's AI supply chain, from chips to the data centres and currencies built on top of it.

Table 16: Recommended Products — Markets We're Positive On

Market / Theme	Rating	Recommended Product(s)
Asia Semiconductors	4.5 Stars "Very Attractive"	Global X Asia Semiconductor ETF (HKEX: 3119)
South Korea	4.0 Stars "Very Attractive"	LionGlobal Korea Fund SGD
		Franklin FTSE South Korea ETF (NYSE: FLKR)
Taiwan	4.0 Stars "Very Attractive"	Franklin FTSE Taiwan ETF (NYSE: FLTW)
Asia ex-Japan	4.0 Stars "Very Attractive"	M&G (Lux) Asian A Acc USD
		Fidelity Asia Pacific Dividend A-USD
		iShares Core MSCI Asia ex Japan ETF (HKEX: 3010)
Emerging Markets	4.0 Stars "Very Attractive"	JPMorgan Funds - Emerging Markets Dividend A (mth) USD
		Vanguard FTSE Emerging Markets ETF (NYSE: VWO)
Singapore	4.0 Stars "Very Attractive"	Amova Singapore STI ETF (SGX: G3B)
		iFAST-Amova Singapore Equity A SGD
China	3.5 Stars "Attractive"	Fidelity China Focus A-SGD
		iShares Core MSCI China ETF (HKEX: 2801)
China Semiconductors	3.5 Stars "Attractive"	GF CSI All-Share Info Tech ETF (SZSE: 159939)
China Internet (HSTECH)	3.5 Stars "Attractive"	iShares Hang Seng TECH ETF (HKEX: 3067)
Hong Kong	3.5 Stars "Attractive"	Tracker Fund of Hong Kong (HKEX: 2800)
US Semiconductors	3.5 Stars "Attractive"	VanEck Semiconductor ETF (NASDAQ: SMH)
US Internet	3.5 Stars "Attractive"	Invesco NASDAQ Internet ETF (NASDAQ: PNQI)
Japan	3.0 Stars "Attractive"	Xtrackers Nikkei 225 UCITS ETF (LSE: XDJP)
		Amova Japan Dividend Equity SGD
Japan Small Cap	3.0 Stars "Attractive"	BNP Paribas Japan Small Cap Classic Cap SGD
Gold	Diversifier (0-10% allocation)	SPDR Gold MiniShares (NYSE: GLDM)

Declaration:

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report holds a NIL position in the abovementioned securities.