KGI releases 2026 mid-year global market outlook covering US, China, Hong Kong and Taiwan

KGI Securities released its 2026 Mid-Year Global Market Outlook on June 9, 2026, analyzing economic conditions in the US, mainland China, Hong Kong, and Taiwan. The US economy is expected to grow at 2.2% in 2026, fueled by AI-driven capital expenditure and reduced dependence on oil prices, despite elevated inflation from US-Iran tensions. The Federal Reserve is projected to hold interest rates steady through year-end, though potential inflation spikes could pressure future hikes. China and Hong Kong markets are undergoing structural shifts, with high-tech exports remaining resilient amid weak domestic demand and anemic property sectors. Global AI investment is supporting external demand and emerging industries, mitigating risks of a sharp economic slowdown. Meanwhile, Japan’s economy faces softening domestic demand but benefits from strong semiconductor-driven external demand, while the eurozone struggles with energy price pressures and tightening credit conditions. The report highlights strong AI-related capital spending in the US as the primary driver of earnings growth, with the S&P 500 index target raised to 8,000 points due to upward fundamental revisions. Non-tech sectors are also expected to benefit from AI spillover effects, creating a diversified market boom. US Treasury yields may rise further if inflation expectations escalate, though stable profit margins have limited negative valuation impacts on equities. KGI’s investment strategy for the second half of 2026 emphasizes liquidity shifts, earnings-focused allocations, credit additions, and diversified assets. The outlook underscores AI’s role in sustaining growth across sectors, while macroeconomic policies in China and Hong Kong aim to realign markets amid historically low equity valuations.