Investors put money into the funds, which are managed by general partners (GPs), and the money is used for acquisitions, growth capital, or turnaround situations. For Other APAC Countries, this material is issued for Institutional Investors only (or professional/sophisticated /qualified investors, as such term may apply in local jurisdictions). The risks and costs of each strategy or product we offer cannot be indicated here because the financial instruments in which they are invested vary each strategy or product. The material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. In the United Arab Emirates, this material is only intended for -natural Qualified Investor as defined by the Securities and Commodities Authority (SCA) Chairman Decision No. 3/R.M. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance.

Japan

• Forecasters expect a smaller gap between the Magnificent Seven and the rest of the S&P 500 companies, as shown in Figure 1.
• Mega-cap technology companies remained a driver of the market’s AI-related gains in 2025.
• In October 2025, the group announced its first major investment with the $40bn acquisition of one of the world’s biggest data centre operators.
• Investments were down by one-third, exits by about one-quarter, and the investment-to-exit ratio slipped 10%, reflecting broad caution across this segment.

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Going Out In Emerging Markets

We look forward to sharing timely insights and analysis across strategies, asset classes, and markets with you. AI remains a defining force in equity markets, but its influence is taking shape in new and sometimes unexpected ways. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professional, if any investment mentioned herein is believed to be appropriate to their personal goals.

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Private Equity: A Focus On Liquidity

As the world’s capital seeks resilience in a changing global economy, private markets hold the key to many pressing challenges and opportunities. Investors are increasingly seeking a whole-portfolio approach that incorporates active equities, fixed income, cash, multi-assets, index funds and private markets. In 2026, private markets are transforming how societies build infrastructure, how businesses finance growth, and how investors achieve diversification in their portfolios.

Market Outlook: A Multidimensional Polarization

References to companies are for illustrative purpose only and should not be construed as investment advice or an investment recommendation. Starting with our clients’ needs – we offer more options across public and private investments to help them meet their goals. As 2026 brings on a new cycle, investors are adjusting to a fundamentally transformed commercial real estate market. The rapid repricing of capital values has created the best entry point for investors in years.

Repricing: Tech Adjusts To New Narratives

• Japan will see another year of solid growth, enhanced by a steadily increasing focus on capital efficiencies and shareholder returns.
• To kick things off, we’ll hear from Bruce Kasman, our chief global economist.
• It’s spreading into banks, healthcare, logistic, and utilities.
• A key catalyst boosting the prospect of healthcare stocks came in the form of Pfizer reaching its landmark agreement with the US administration in September 2025, which was quickly mirrored by other big drug companies.
• AI remains a defining force in equity markets, but its influence is taking shape in new and sometimes unexpected ways.

Financing conditions also strengthened, with syndicated loan issuance up 83% and private credit expanding, giving GPs room to deploy $282 billion in aging dry powder. That pushed the investment-to-exit ratio up 10%, suggesting firms are holding assets longer while only selectively pursuing new opportunities. This shows that while the industry is willing to take risks, the follow-through often depends on shifting market conditions. Private equity firms are leaning into opportunity despite market volatility. Private equity accounted for 29% of total M&A activity in EMEA in 2024. Private equity accounted for $398 billion in M&A volume in the Americas in 2024 (22% of total activity), down sharply from $865 billion (28%) in 2021.

Access Our Local M&a Trends In Private Equity From The Following Countries Or Regions:

• But market prices have now caught up with events, and even as we raise our forecasts, valuations in many cases exceed our assessment of fair value.
• For European high-yield, default rates are expected to remain in the 3–4% range for the third consecutive year, but elevated recoveries are limiting credit losses.
• “In our view, strength in sterling is more likely to come in the first half of the year, with the second half seeing fiscal fears coming back into focus ahead of the next budget, meaning underperformance becomes more of a central risk.”
• So, you know, to the extent that growth proves to be even firmer than we expect, that would have likely knock-ons in terms of sticky, uh, inflation at a time when affordability is already currently a bit of a hot political potato.

Looking ahead, what are the main forces shaping the FX market in 2026? So we see the ECB, the Riksbank, the Nords Bank, the RBA, and the RBNZ all on hold over 2026. We think the easing cycle for many central banks has ended. It’s probably limited in nature, but certainly there’s probably the Bank of Japan expected to be the only DM bank that’s tightening. I think there’s definitely scope for some divergence across the DM central banks.

In the above video, Subramanian chats with Chris Hyzy, Chief Investment Officer, Merrill and Bank of America Private Bank, about the forces driving equity performance and addresses questions top of mind for investors now. In March 2024, Morgan Stanley also helped Rockefeller Capital Management raise $850 million of debt in private markets to refinance its loans. Some issuers have been raising debt in private markets to help refinance their existing loans. “We spot situations and quickly identify whether the public/syndicated or private markets will offer the best execution for our clients,” Shah says. Private credit assets under management may reach $2.8 trillion by 2028, which would double 2022’s asset level, according to Preqin.4

While the labor market is softening, it is not collapsing, so it may not need the pace of easing priced into bond markets, especially if economic growth reaccelerates. That would be a major boost for equity, credit, and other risk asset. So sticky inflation, weak supply sides due to immigration policy and solid growth as you recouple the labor markets to an overall decent performance we’re expecting across most of the globe. “This is likely to hit EM FX, rates markets and EM credit too, with sell-offs Everestex reviews and negative returns resulting,” noted Luis Oganes, head of Global Macro Research at J.P. Across global credit markets, focus is shifting from the macro to the micro, and spreads are expected to widen in 2026. We see growth solid and importantly begin to see as we move through the first half of the year, a recoupling of the labor markets, which have been quite weak, to overall economic performance.

While private credit exposures are generally not underwritten or backstopped by taxpayers, concerns around transparency and interconnectedness have prompted greater regulatory scrutiny. These advantages have become more valuable amid market volatility and tighter bank balance sheets. What began as an alternative to syndicated bank loans has expanded into infrastructure, asset-backed lending, and specialty finance. As private credit has grown in scale and prominence, it has also attracted heightened scrutiny and debate. Public markets are showing early signs of reopening, with the $7.2bn IPO of Medline—the largest listing of 2025—providing a positive signal that issuance is beginning to pick up.