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LGT Global Outlook 2026: Navigating an Uncertain World Order

On January 7, 2026, LGT released its latest report titled "Global Outlook 2026: Shift in Balance. The document reflects on the transition from the norms established post-global financial crisis to a new era marked by significant market reformation. It emphasizes that disciplined diversification remains the strongest defense for long-term investors amid these changes.

As we step into 2026, it is expected to be a year where a new world order remains unfixed. Market dynamics are compelled to realign against high inflation risks, increasing public debt, and rising capital costs, making it challenging to rely on the clear correlations and risk premiums that investors have depended upon for decades.

Mika Castenholtz, Global Head of Investment Solutions at LGT, stated, "In 2026, a generation that has not experienced the global financial crisis will enter an era that is yet to be defined. There is a diminishing importance of historical benchmarks, and with markets heavily influenced by policies and geopolitical aspects, the cardinal discipline for investors is prudent diversification."

Key Themes to Watch in 2026: The New Normal of Uncertainty

The report identifies three key areas that require attention in 2026:

1. Shifting Focus of AI: The emphasis within artificial intelligence is evolving from a software-centric approach to addressing physical constraints in energy, infrastructure, and funding. As physical bottlenecks such as power supply and cooling infrastructures become apparent, value sources are projected to shift from hyped hyperscalers to infrastructure companies. LGT advocates a "barbell strategy" to navigate this transition, which balances short-term enablers in data centers and power value chains with long-term transformative AI agents in processes, factories, and urban settings.

2. Water Stress: This emergent structural challenge remains underappreciated within global portfolios. Nearly half of the world's population is already facing seasonal water shortages, and if trends persist, up to 31% of global GDP could be adversely affected by 2050. Investors must acknowledge resource vulnerabilities and pursue geographic diversification in high-risk regions. Innovations in industries like agriculture, energy, semiconductors, and mining regarding water efficiency, resource recycling, and desalination will present significant investment opportunities.

3. The Rise of Digital Assets: As institutional investors gradually embrace digital assets, by 2025, Bitcoin’s market cap is expected to match the total volume of US dollar banknotes in circulation. While volatility has been decreasing, the asset class remains inherently susceptible to fluctuations. LGT acknowledges that while digital assets can contribute to portfolio diversification, vigilant investment ratios, rigorous governance, and scenario analysis remain crucial before assuming their benefits.

Investment Strategies in a Transformative Era

Looking ahead to 2026, LGT is prioritizing comprehensive coverage, quality, and agility. They focus on prudent diversification across regions, asset classes, and structural themes, particularly in areas where liquidity can be assured in challenging funding environments. Simultaneously, it is essential to design portfolios that can flexibly pivot in response to changing conditions rather than relying on a single macro outlook that may lose relevance quickly.

Castenholtz remarks, "Our role is not to simplify all possibilities into one narrative. Even when the global economic outlook feels treacherous, our mission is to support clients in continuing their investments, managing liquidity needs effectively, and staying aligned with long-term objectives."

For a detailed view of the regional insights contained in the "LGT Global Outlook 2026: Shift in Balance" report, please visit their official website.

About LGT

LGT, owned by the Princely Family of Liechtenstein for over 90 years, is an international private banking and asset management group with a wealth of assets under management (AUM) amounting to CHF 359.6 billion (USD 451.6 billion) as of June 30, 2025. With over 6,000 employees across more than 40 locations in Europe, Asia, the Americas, Australia, and the Middle East, LGT serves high-net-worth individuals and institutional clients. For more information, visit LGT’s Official Website.