Investment Strategy Focus August 2026

1. A stronger reflationary environment: a robust global economic rebound developed over June-July even as energy prices rebounded, led by positive industrial momentum. Inflation concerns persist, pushing bond yields higher. Supports value-oriented global stocks, real assets e.g. infrastructure,  commodities.

2. Hormuz in a stop-start state: once again, the flow of oil and gas out of the Gulf has been interrupted by re-escalation in military action. The longer the interruption to energy exports, the greater the stagflation risk for the world. Oil refiners continue to benefit from record refining margins on oil products.

3. Copper is strong, will gold follow? These metals have tracked each other higher since 2021 but have diverged in the last 3 months as rising bond yields and a stronger US dollar have weighed on gold. Central banks have turned big gold bullion buyers, while copper is still supported by electrification, tech and defence demand. Maintain Positive views on copper and gold.

4. Summer rotation out of memory: the AI investment theme has corrected sharply since end-May, with big-spending hyperscalers falling 19% since then. Global financials have taken up market leadership, boosted by a strong batch of US Q2 results. We suggest diversifying out of concentrated technology positions into value and US small-cap stock exposure.

5. Buy value-oriented Euro Banks, Poland: European banks have returned 16% this year thanks to strong earnings momentum and shareholder returns. Polish stocks have also demonstrated strong earnings momentum this year, supporting a 20% 2026 return while remaining cheap at 11x forward P/E.