Jean-Marie Mercadal, CEO of Syncicap Asset Management, urged investors to diversify beyond U.S. equities, warning of heightened market volatility in 2026 driven by artificial intelligence investment uncertainty and U.S. midterm election cycles.
Speaking at a France-Macau Chamber of Commerce event yesterday, Mercadal pointed to valuation opportunities in Europe, China, and emerging Asia.
“It’s time to diversify,” he said.
Noting that Nvidia’s stock dropped 5% after announcing plans to invest USD200 billion this year, up from $150 billion, Mercadal drew parallels between current AI enthusiasm and the 2000 dot-com bubble. However, he dismissed fears of a full-blown bubble.
Even as short-term doubts persist, the financier predicts that AI will transform the world like the internet, despite near-term uncertainty.
Mercadal also said the global economy should expand by around 3% this year, bolstered by low inflation and falling U.S. and European yields.
Unlike the dot-com era, when stock prices far outpaced earnings, today’s AI firms are shifting from high-margin, low-investment models to capital-intensive ones, potentially lowering valuations and sparking volatility.
He also highlighted that China faces hurdles despite its industrial prowess. Growth there may slip from last year’s 5% to a challenging 4.6% target, hampered by low consumer confidence following the real estate bust.
Household deposits in China have reached 120% of GDP, “sleeping” in bank accounts, Mercadal said. “The challenge for the government is to make this money work again,” he added.
Europe, China shine in valuations
For the first time since 2008, U.S. equities underperformed last year, while Europe, China, and emerging markets led, Mercadal said. U.S. price-earnings ratios sit at historically high levels, while Europe offers double-digit earnings growth and stimulus tailwinds.
“Low valuation, double-digit expectations for earnings growth, and new stimulus coming from Germany,” Mercadal said.
China’s equities, cheap after four years of damage from regulatory measures and geopolitical tensions, are now drawing returning investors amid pro-business policies. Meanwhile, emerging Asia is gaining from AI infrastructure demand and “China plus one” strategies.
Quoting Bill Gates of Microsoft, Mercadal said, “Markets very often overestimate the benefits for the next two years, but underestimate the benefits for the next ten years.”
He recommended gold amid doubts about U.S. Treasuries and fears of frozen assets like Russia’s.
Central banks, including China’s, are buying gold as fiat currencies strain under debt.
Strategic metals such as copper and platinum face shortages amid the electrification shift.
“Be careful about having too much government debt in the U.S. and Europe. And we like gold and strategic metals,” he said.
In the Q&A session, Mercadal addressed Hong Kong’s bank stability. Short-term reserves are rising, posing no immediate risk. In the long term, the Hong Kong dollar’s role hinges on China’s capital controls. “As long as you have capital controls in China, you need to have the Hong Kong dollar,” he said.
Mercadal concluded optimistically, “Our advice is to take advantage of volatility to invest more in equities.”
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