- The first half of 2026 was defined by the US-Iran war, which began on 28 February and ended—at least in its kinetic phase—with the signing of a Memorandum of Understanding on 19 June.
- Despite the geopolitical shock, global equities delivered a strong performance. The S&P 500 rose approximately 8% in the first half. Asia was the standout: the Kospi surged more than 70%, crossing 9,000 for the first time in its history, though amidst wild swings; the Nikkei 225 crossed 71,000, also a record. The Hang Seng Index (HSI) dipped to below 23,000 by June 30, the only major Asian index to lose ground in H1 2026.
- SpaceX listed on 12 June at a US$1.77 trillion valuation, the largest IPO in history. The AI infrastructure trade was the first half of the year's dominant investment theme. But even within the AI space, differentiation started to emerge.
- The first half of 2026 was a powerful reminder that markets do not move in a straight line. After a strong rebound in 2025, gold and Hang Seng Index were laggards in 1H 2026. History shows staying invested, disciplined, and diversified remains the most reliable path through geopolitical shocks—even ones that reshape the global order.
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1H 2026 in review: What moved markets?
The first six months of 2026 have been eventful for global markets. On 28 February, US and Israeli attacked Iran, triggering the closure of the Strait of Hormuz and pushing Brent crude from $67 to a peak of $119 per barrel. US CPI reached 4.2% in May—the highest since April 2023—while the 30-year Treasury yield touched 5.20%, its highest level since 2007. The European Central Bank was forced to hike in June, the Bank of Korea leaned hawkish, and newly installed Fed Chair Kevin Warsh delivered his first FOMC press conference with a hawkish dot plot signalling one rate hike by year-end—a complete reversal from the multiple cuts priced in when the war began.
Despite this, the recovery was swift. The US and Iran signed a memorandum of understanding on 19 June, formally ending 111 days of conflict. Global equities delivered their best quarter since 2020, with the S&P 500 finishing the first half up approximately 8%. Asian markets were the standout: the Kospi surged more than 70% year-to-date on the AI semiconductor demand cycle, crossing 9,000 for the first time in its history, while the Nikkei broke 71,000, also a record.
Notably, Hong Kong’s local equities lost ground—the only major market in Asia with negative performance in H1 2026.
US Treasuries retraced, despite elevated headline inflation, as there is a reasonable expectation of core inflation being brought under control after the energy shock is resolved, which appears to be happening.
Looking at fund performance on Endowus Fund Smart, technology dominated equity fund performance on Endowus Fund Smart in the first half of 2026, with four of the five top-performing funds concentrated in the sector—a sign of continued investor conviction in AI, connectivity, and digital infrastructure themes despite a volatile macro backdrop.
In fixed income, frontier and emerging markets debt led the way. A frontier market fund was the top performer. Renminbi, emerging market sovereign, and Asian high-yield bond funds rounded out a top five skewed firmly toward higher-yielding pockets of the credit market.
Top performing equity funds
Top performing fixed income funds
*Note: Performance as of 30 Jun 2026. The best performing funds were determined based on performance in the half year between 1 Jan 2026 and 30 Jun 2026 from all available retail funds on Endowus platform. For the same underlying fund, the better / worst performing share class is shown.
For those interested to learn about the most popular fund choices on Endowus Fund Smart. Here’s a look at the top 3 funds that were the most in-demand# among investors in the various categories across equities, fixed income, cash management, and more.
Most popular equity funds
Most popular fixed income funds
Most popular cash management funds
Most popular multi-asset, thematic, and other funds
#Note: The most popular funds were determined based on the net inflows on Endowus Fund Smart in the 6-month period between 1 Jan 2026 and 30 Jun 2026. This analysis excludes in/outflows through the Endowus discretionary and model portfolios, and only includes retail funds available on Endowus Hong Kong.
Where are markets headed for the rest of 2026?
It's difficult to predict where the market will go next. Such difficulty is demonstrated by looking back at historical returns of different asset classes.
Technology, emerging markets equities and frontier markets debt led the pack in 1H 2026, and yet leadership like this rarely persists. History shows that the asset class winner of each year could change dramatically year-on-year. Between 2010 to 2023, for instance, REITs ranked as the top-3 best performing asset class 8 out of 14 times, yet, in 2020 and 2022, it ranked at the bottom of the pack.
In addition, the HSI losing ground in H1 2026—while markets in Korea, Japan, Australia and Singapore were all positive—is a healthy reminder that home turf bias may not necessarily work in investors’ favour. This is not to say local equities should not be part of your portfolio—but they are better included into a broader exposure.
What's important is to remain invested, disciplined and diversified. Overall, investors should be confident that the market has historically rewarded long-term strategies, with a disciplined and diversified portfolio that takes advantage of outperformance in one sector and cushions underperformance in another.
As we enter the second half of 2026, some might guess technology, or frontier and emerging market debt might continue their winning streaks. Instead of getting into this guessing routine, try adopting a scientific and evidence-based investing approach that is based on diversification, compounding and goal-based asset allocation.
Customise your portfolios in minutes with Endowus Fund Smart
On Endowus Fund Smart, you can create your own diversified, resilient investment portfolios with 400+ Best-In-Class funds selected by our Investment Office. Browse our complete fund list here.
These funds are selected by applying a strict, institutional-grade screening process that is rigorous, thorough, and continuous—we call this proprietary framework SMART+.
Choose from our curated portfolios including the Endowus Flagship Portfolios, core solutions for cash management and income needs, or satellite themes such as Global Technology, Future Trends, Sustainability Equities and China Equities.
Read more: Endowus HK Q1 2026 portfolio performance review
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Investment involves risk. Past performance is not an indicator nor a guarantee of future performance or returns. Projected performance or returns is not guaranteed to materialise. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested.
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Complex Products
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