Franklin Templeton Investment Solutions and HSBC Private Bank and Premier Wealth discuss their preference for tech-driven US equities this year. In line with a number of investment managers, Franklin Templeton also favours emerging market equities.
A number of wealth managers are still constructive on
tech-driven US and emerging market equities, despite unsettled
markets and stocks having experienced significant volatility
in July, driven by selling pressure, sharp corrections in
semiconductor and AI infrastructure sectors,
Willem Sels, global chief investment officer at HSBC Private
Bank and Premier Wealth, remains overweight in US equities.
This is because the US is still offering a strong
combination of earnings visibility, artificial
intelligence leadership, innovation and corporate quality.
US equities have outperformed other developed markets
year-to-date, Sels said, while broader participation from small
caps, cyclicals and the Forgotten 493 suggests that the US market
is becoming less dependent on the Magnificent 7. (The Magnificent
7 includes tech giants Alphabet, Apple, Amazon, Meta, Microsoft,
Nvidia and Tesla while the Forgotten 493 refers to the remaining
493 companies in the S&P 500 stock index.)
“Technology remains a key overweight in our strategy,” Sels said
in a note. “The sector continues to lead in semiconductors,
software, cloud infrastructure and data-centre investment and is
expected to retain a substantial earnings and revenue-growth
advantage through 2027.”
“Technology valuations remain elevated, but valuation risk is
increasingly concentrated in select industries rather than across
the wider sector. This reinforces the importance of selectivity
where high multiples require continued exceptional earnings
delivery,” he added.
US equities have delivered broad gains in 2026. As of 10 August,
the S&P 500 is up 13.3 per cent year-to-date, the Nasdaq
14.5 per cent, the Dow Jones 12.3 per cent, and the Russell 2000
21.6 per cent. The Forgotten 493 gained 15.4 per cent, compared
with 4.8 per cent for the Magnificent 7.
Patrick Ho, chief investment officer, North Asia at HSBC Private
Bank and Premier Wealth, said US equities have outperformed other
developed markets year-to-date, but emerging markets remain
ahead, supported by the exceptional gains in South Korea and
Taiwan.
This was echoed last week by
Franklin Templeton Investment Solutions (FTIS). The firm
remains bullish on equities, despite renewed inflation concerns,
higher rates and geopolitical risk. FTIS sees more than 20 per
cent earnings growth expected for US and global equities over the
next 12 months, with 35 per cent growth expected in emerging
markets. The firm also sees improving earnings breadth as a sign
of the market becoming less dependent on a handful of
technology stocks.
“The global macroeconomic environment appears relatively robust,
led by the United States and Japan, while the outlook for the
euro area has also improved, despite energy-related inflation
concerns,” FTIS said in a note. “In addition, recent equity
market volatility has reset valuations for technology names and
moderated sentiment and positioning indicators that were trending
towards exuberance.”
“Our view on US equities shifted somewhat during July to a more
style and size-neutral position,” FTIS continued. The S&P 500
remained nearly flat in July, but seven of 11 sectors
advanced. Energy gained 12.5 per cent and financials rose 6 per
cent, while technology fell -3.5 per cent.
“Technology experienced a sharp internal rotation during July.
Systems software gained 17.9 per cent, while semiconductors
declined -8.5 per cent and semiconductor equipment fell -32.5 per
cent,” Ho said.
“Technology’s forward P/E premium to the S&P 500 has narrowed
from 10.7x at the start of 2026 to roughly 4.8x at the time of
writing. Valuations nevertheless remain elevated in select
industries, particularly semiconductor equipment,” Ho continued.
“The earnings outlook remains supportive.”
Consequently, FTIS retains an AI tilt within its portfolios with
overweight exposure to the US, Japan and emerging markets, where
it sees the most potential for growth. “The AI hardware and
memory trade saw some volatility in July as investors took
profits, but the underlying fundamentals of AI adoption haven’t
changed; meaning, these less-crowded positions make sense to us
at lower valuations,” FTIS said. “This is particularly true in
emerging markets, where stellar earnings are helping to contain
price/earnings ratios.”
A
number of wealth managers remain constructive on tech and AI.
Adrien Roure, multi-asset portfolio manager at
Paris-headquartered Indosuez
Wealth Management, for instance, is positive about tech
and AI-related investment. Roure maintains a constructive view on
US equities and developed markets. Meanwhile, Pictet Asset
Management remains neutral on US equities, and positive on
emerging markets excluding China, keeping an overweight exposure
to technology.
FTIS is less optimistic towards markets with lower exposure to AI
and technology, particularly those with sensitivity to energy and
commodity prices. Energy price volatility looms large in the
minds of governments and central banks in regions with heavy
dependence on commodity markets.
Consequently, FTIS remains underweight in euro area equities,
despite an improvement in some leading growth indicators, as
energy concerns constrain growth and force a more hawkish
approach from the European Central Bank. Australian equities
remain the firm”s least-preferred region due to a mixture of weak
domestic growth and unsupportive fiscal policies.