Nomura sees steadier growth in 2026

KUALA LUMPUR: Nomura Asset Management Malaysia expects 2026 to mark a return to more normalised global economic conditions, underpinned by resilient corporate earnings, easing tariff pressures and sustained investment in artificial intelligence (AI), despite lingering geopolitical and policy uncertainties.
Speaking at Nomura Asset Management Malaysia’s Breakfast Conference 2026, managing director Leslie Yap said, the firm remains broadly constructive on both global and local markets, with earnings growth continuing to anchor its investment outlook.
“At the end of the day, it still comes back to earnings. Fundamentally, we think earnings remain positive. We don’t see major growth, but we do see stability, especially at the domestic level.”
The conference featured insights from Richard Kruse, head of global equities at Nomura Asset Management UK and Brett Collins, managing director and client portfolio manager at Nomura Corporate Research and Asset Management Inc.
Kruse said the global economy had weathered a volatile 2025 better than expected, despite higher-than-anticipated tariffs and geopolitical tensions under Donald Trump’s administration.
“In 2026, the drag from tariffs should gradually fade and the economy should return closer to its potential,” he said, adding another year of solid earnings growth is expected globally.
While three consecutive years of market gains have pushed price-to-earnings ratios higher, Kruse noted that concerns about overheating would ease if profit growth remains strong.
On downside risks, Kruse highlighted three key areas investors should watch.
The first is the possibility of the US drifting closer to recession, particularly if consumer spending weakens under sustained cost pressures.
“The second is geopolitics,” he said, citing the risk of heightened transatlantic tensions should US policy towards Europe become more aggressive.
The third risk lies in technology, where any disruption to current AI investment assumptions could trigger a reassessment of valuations.
“If there were a shock suggesting current AI investments are misplaced or unproductive, that would clearly be a downside risk,” he added.
Collins said the market is currently pricing in two US Federal Reserve rate cuts this year, a view he described as reasonable given stable employment conditions and inflation that remains sticky but not accelerating.
“Lower rates tend to drive higher growth in the near term, which is supportive for emerging markets, demand and exports,” he said, while cautioning that longer-term inflation risks remain.
Collins also stressed the importance of diversification amid uncertainty, noting that currency and policy outcomes are far from one-directional.
“In an uncertain environment, diversification across asset classes, regions and markets is still your best defence,” he said.
On AI, Kruse said, the technology wave is likely to be long-lasting, typically spanning five to seven years, but warned that equity markets often move ahead of fundamentals.
“Technological penetration can continue even if equity markets have a bad year,” he said, adding valuations remain critical in assessing risk, especially among loss-making AI software firms.
Yap said from a Malaysian perspective, the country remains well-positioned to benefit from global stability due to its trade-oriented economy and strong manufacturing and supply chain ecosystem.
“As long as the global economy remains stable, Malaysia should continue to benefit,” he said, adding that infrastructure spending, financials and selective consumer sectors remain areas of interest.
On AI-related opportunities, Yap said, Malaysia’s role in data centres, manufacturing and semiconductor supply chains positions it to capture spillover benefits without having to pick winners among early-stage startups.
“We don’t know who’s going to win in AI. But we know they all need semiconductors and infrastructure.”