The direction of the capital markets is uncertain than ever before. The Geneva-based private bank Pictet reveals what investors can expect in 2026.
There are many market outlooks for the stock markets.
But when the Geneva-based private bank Pictet gives its assessment of the financial markets, it’s certainly worth listening closely.
Gold shines
Of course, even famous private bankers can get it wrong.
But the structured approach of Pictet Zurich’s chief strategist Anastassios Frangulidis promises better decisions, as ultra-high-net-worth individuals, asset managers, and investors from family offices confirmed to muula.ch during the presentation of the new market outlook at Zurich’s luxury hotel Baur au Lac.
The bond market remains unattractive for investors, especially from a Swiss perspective, the Pictet economist explained clearly.
With 10-year Swiss government bonds, investors essentially lost money because real interest rates were negative. The best asset class over the past 20 years would have been gold, delivering 11.3 percent per year.
Bonds only yielded less than half that globally. However, global equities still yielded 9.2 percent per annum.
Stock market crash unlikely
Equity investments are also clearly the recommendation made by Pictet at the Baur au Lac and today, Friday, at the luxury hotel Les Trois Rois in Basel.
Despite high valuations, investors should overweight equities. The boom in artificial intelligence (AI) stocks is not over yet, Frangulidis explained.
Only when profit growth in the AI sector slows down would problems arise, the Pictet expert emphasized.
This is not yet in sight, which makes an immediate valuation correction seem unlikely.
Music plays in Europe
Another argument in favor of equities is the liquidity currently being provided by central banks, as inflation will soon peak.
Europe and emerging markets could surprise on the upside much more than equities in the US, for example, it added.
Historically, price-earnings ratios in Europe have been lower than those in North America, but statistics show that such a large discount in valuations is not normal.
US stocks are likely to yield “only” 5 to 6 percent per year in the future.
Emerging markets catching up
Europe is already experiencing a resurgence, which Pictet is underpinning with the launch of Pictet–Quest European Revival, an investment fund that capitalizes on massive investments in technology, defense, strategic infrastructure, and the strengthening of supply chains across Europe.
Digitalization, domestic arms production, and infrastructure renewal are likely to slowly gain momentum.
According to Pictet, emerging markets, some of which are growing faster than the US, also benefit from lower inflation, advances in digitalization, and improvements in governance in many countries.
Frangulidis explained that Swiss equities also offer quality at very low prices. He is convinced that the Swiss stock market is likely to catch up strongly over a five-year horizon.
Risk budget better invested in stocks
With Swiss bonds, on the other hand, investors are virtually guaranteed to lose money, joked the Pictet investment expert.
Gold is supported by global uncertainty, further investments by central banks in emerging markets, and geopolitics.
However, volatility is much higher, which also requires a higher risk budget.
Investors would be better off investing their money in stocks. According to Pictet, there is still room for growth there.
Check for US consumers
The erratic policies of US President Donald Trump on punitive tariffs, the deportation of migrants, and the ‘One Big Beautiful Bill’ act to reduce the tax burden on rich Americans and the lower classes suddenly do make perfect sense, according to Pictet.
US consumers are spending less because they have less money at their disposal – a paycheck from the government helps, and US unemployment would have been much higher with more migrants, Frangulidis explained.
Market outlooks should be this informative. But rarely, there aren’t many as insightful as this.
05.12.2025/kut./ena.
