Despite concerns about the impact from the ongoing conflict in the Middle East on markets, BNP Paribas Wealth Management’s Prashant Bhayani said that there are still buying opportunities for investors as the bank believes a global recession remains unlikely.
In the first five months of 2026, the MSCI World Index has increased by more than 10%, and if it stays at this level or above, it will mark the fourth consecutive year of double-digit gains. According to Prashant Bhayani, BNP Paribas Wealth Management’s Asia chief investment officer, the bank has moderately revised its growth forecasts downwards amid risk linked to the Iran war, but remains optimistic about the broader outlook,
Drivers include manageable oil prices with the view of an eventual agreement due to shared incentives for stability. The bank also highlighted strong US employment data and expectations for the Federal Reserve to hold on interest rates with stable projections on long-term inflation.
“We are not in the camp that this is going to tip the global economy into a recession. And then of course, there’s a lot of data that you won’t see but overall, most geopolitical events are buying opportunities,” Bhayani said at a recent media briefing.
“We’ve seen that it took only about 11 days for the S&P to recover a 9% loss and, of course, the market has […] until recently, hit new highs. So again, getting invested and staying invested is important in putting some of these geopolitical events in context.”
AI: Concentration risk offset by profitability
The main contributor of the continued equity rally is aritficial intelligence (AI), particularly hyperscalers like Amazon Web Services (AWS) or Meta, which now account for around 40% of US market weighting. Bhayani likens such benchmark concentration to previous crises, but notes that profitability is a key difference.
“So obviously, their weighting is very high because that’s where the performance is. And that compares similarly to the Internet bubble of 2000, Nifty 50 in the early 70s, and Japan in 89. You can see the railroads were even higher,” Bhayani explained.
“But the other thing is that these companies are profitable. The hyperscalers are on mid-20s price-earnings multiple. In the Internet era, it was much higher. Most of the companies didn’t make money. So it’s all about AI CapEx.”
Overall, the bank’s base case is for global growth to remain positive even as inflation picks up. It remains neutral on global equities and advises investors to diversify via region, sector, and style, including into hedge funds. On fixed income, it favours selected governments bonds, investment grade bonds and infrastructure.
