Investor Allocations: Risk-on rotation accelerates: US leads, Europe funds the shift

Research evidence excerpt

Investor Allocations: Risk-on rotation accelerates: US leads, Europe funds the shift

Investor Allocations Equity Strategy Global

Risk-on rotation accelerates: US leads, Europe funds the shift

◆ Global risk appetite remains firm; the US main beneficiary of rising flows and allocation shifts

Amit Shrivastava*

◆ Funds cut UK exposure amid rising macro headwinds; positive sell-side outlook could limit the downside Director,Strategy Sustainability; European Equity

HSBC Bank Middle East Limited, DIFC

◆ European positioning turns more cyclical; Financials strengthening, Healthcare a potential anti-consensus play amit1.shrivastava@hsbc.com

+971 450 93349

Risk-on momentum persists; funds rotate into US the sell-side view remains constructive – forecast 2026 EPS growth of c20%. Duncan Toms*, CFA

Multi-Asset Strategist

Despite AI jitters, investors’ overall risk-on sentiment from the last month Also, the UK market’s high overseas revenue exposure could benefit from a HSBC Bank plc

(Investor Allocations, 2 June 2026) seemed to have continued in recent weeks, stronger dollar, potentially offering some hedge against domestic headwinds. duncan.toms@hsbc.com

+44 20 7991 3025

as global equities (FTSE All World) have recorded another month of strong Europe: cyclical buying; we like Financials; Healthcare is under-owned

Sumit Charde*

returns in June (up 5.4%, m-o-m, as of 26 June). Amid an easing geopolitical In Europe, funds are raising their exposure to cyclicals relative to defensives Associate

backdrop and subsequent easing of global energy prices, the weekly global from low levels – a shift consistent with the broader risk-on positioning among Bangalore

equity fund flows jumped to their highest level since Mar-2021 (chart 1).