CGS International, April 16, 2026

Excerpt from CGS International report.

Report Summary

• Action: Remain defensive in asset allocation and asset selection. No explicit BUY or SELL calls, but emphasis on caution due to geopolitical and inflationary risks.
• Most Important Idea: Inflation is the most pernicious risk for investors. Gold has been the most effective hedge; bonds have underperformed inflation over the past decade.
• Sector Highlights:
  • Energy sector is attractive due to structural undersupply and trades at 7x cash flow versus 17x for MSCI AC World.
  • Financials and technology (both US and Asia) are trading at a large discount to the broad market and have priced in downside risk to earnings.
• Market Insights:
  • Extended Middle East conflict poses challenges for EM/Asia, especially those dependent on fossil fuels.
  • Asia benefits from semiconductor supply chain, but this remains cyclical.
  • China relatively insulated on energy security and has positive surprises on share buybacks/dividends.
  • Gold is recommended as a hedge against inflation; bonds are not considered a hedge.
• Country Highlights:
  • Underweight India due to expensive valuations and vulnerability to AI disruption.
  • Indonesia and Philippines expected to rebound in 2H26F, but macro headwinds remain.
• Risk Analysis:
  • Risk compensation is poor in US equities; leverage and fiscal sustainability are major concerns.
  • Follow the leverage to identify potential crisis areas — next crisis cited as sovereign debt and AI bubble.
• No specific stock ticker or target price is mentioned in the report.

Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgs-cimb.com