UOB Asset Management Outlines Three Market Scenarios Amid Rising Geopolitical Risks
UOB Asset Management has launched its 2Q 2026 Quarterly Investment Strategy , highlighting the increasingly uncertain global investment market environment. While global economic growth and structural innovation remain solid, pressure from geopolitical risks is increasingly clouding the market outlook.
According to the report, global growth expectations and corporate performance remain relatively positive across key regions, driven by continued investments in artificial intelligence (AI), energy, and infrastructure. However, recent geopolitical developments—particularly in the Middle East—have increased uncertainty, including potential disruptions in energy markets, renewed inflationary pressures, and increased market volatility.
UOBAM assesses that the Iran conflict is no longer one-way and outlines three potential scenarios in the coming months.
In a scenario with a 40% probability, geopolitical tensions ease, stabilizing energy prices, easing inflationary pressures, and rebounding risk assets. Another scenario with the same probability (40%) predicts prolonged disruptions, triggering high volatility and the risk of a downside in the economy and markets.
Meanwhile, in a scenario with a lower probability (20%) but greater impact, the conflict has the potential to escalate, thus increasing the risk of a global recession.
Anthony Raza, Head of Multi-Asset Strategy , UOBAM, said, “While difficult to predict, markets will likely focus more on the geopolitical impact on economic stability, inflation, and risk premiums than on political dynamics themselves. This situation is encouraging investors to re-evaluate the reliability of global policies and the security situation, ultimately increasing the likelihood of structurally higher risk premiums and reinforcing a more cautious, resilient, and diversified investment portfolio approach.”
In line with these conditions, UOBAM maintains a neutral stance on equity assets relative to the benchmark index, while emphasizing the importance of diversification and selectivity. Meanwhile, the investment portfolio remains diversified in fixed-income instruments, with an overweight position on gold and an underweight on cash.
