The Mexican economy faces an increasing deterioration in its public finances, which has significantly reduced the margin to maintain its sovereign investment grade—a scenario that could translate into higher financing costs, capital outflows, and lower foreign investment in the coming years.
In its Report on the Economic Situation of Mexico for the second quarter of 2026, Banamex warned that the rising fiscal deficit, the growth of public debt, and the increasing cost of the government’s financial service have begun to trigger red flags among international rating agencies.
The warning comes after Standard & Poor’s modified the outlook on Mexican sovereign debt from stable to negative in May, while Moody’s downgraded the country’s rating from Baa2 to Baa3, just one notch above losing investment grade.
The deterioration of fiscal metrics explains much of the concern. Public Sector Borrowing Requirements closed 2025 at 4.9% of Gross Domestic Product, even above official forecasts, while net government debt reached 52.7% of GDP, its highest level in four decades.
Added to this is a sharp increase in the financial cost of borrowing. For 2026, it is estimated that interest payments on public debt will amount to 1.5 trillion pesos (around 83 billion dollars), equivalent to 4.1% of GDP—a figure that is beginning to compete directly with spending allocated to infrastructure, healthcare, or education.
Banamex points out that the government’s fiscal space has also been reduced by the need to subsidize gasoline prices to contain the impact of international oil price increases stemming from the conflict in the Middle East.
The Ministry of Finance reactivated IEPS subsidies this year, which kept the price of Magna gasoline below 24 pesos per liter, but implied an estimated fiscal cost of 15.8 billion pesos (878 million dollars) in lost tax revenue for the federal government.
The consequences of an eventual loss of investment grade could be profound for the Mexican economy. Among the main risks are forced sales of Mexican bonds by funds with mandates exclusive to investment-grade debt, a potential exclusion from global benchmark indices, pressure on the exchange rate, and an increase in financing costs for banks, corporations, and local governments.
This scenario is also unfolding at a time of lower economic momentum. Banamex estimates that Mexican GDP contracted 0.6% quarter-on-quarter during the first quarter of the year and forecasts growth of just 1.3% for the entirety of 2026, which would imply three consecutive years of expansion below the country’s historical average.
The institution considers that Mexico still possesses significant strengths, including central bank independence, a flexible exchange rate regime, and commercial integration with the United States. However, it warns that restoring investor confidence and stabilizing the trajectory of public debt have become the main short-term economic challenges.
The review of the USMCA, international geopolitical uncertainty, and a global environment of slower growth place additional pressure on an economy that, while maintaining macroeconomic stability, is beginning to show signs of fiscal vulnerability that seemed distant just a few years ago.
According to economists Marcos Buscaglia and Dante Sica, Argentina is currently experiencing one of those rare economic nexuses that occurs only once or twice a generation. As the world fragments and globalization shifts toward the control of supply chains, the country possesses exactly what this new global economy demands: food, energy, and mineral security.
However, the analysis they shared during the macroeconomic panel at the “Perspectivas 2026” event, hosted by Cohen, goes far beyond mining in San Juan or “Vaca Muerta”—the geological formation in the Argentine Patagonia that houses one of the world’s largest shale oil and shale gas reserves.
For Sica, former Minister of Production and Labor, Argentina possesses four ecosystems that the world will demand in the coming years: energy, mining, agribusiness, and technology. And it has them “with an attractive market size capacity, a supporting industrial base, and a significant human resources capacity.” The difference compared to previous cycles, he stressed, is that these sectors do not currently face a demand or price problem; their main restriction is execution capacity.
This is where the concrete opportunity for investors and advisors emerges: not in the large companies leading these ecosystems—which generally access international financing—but in the supplier rings surrounding them. “The big players take financing abroad. Then comes the second and third rings, which are the suppliers. You have to look closely there,” Sica pointed out, specifically targeting the metalworking sector and industrial services companies.
Buscaglia, an economist with an extensive background in emerging markets analysis, introduced a relevant conceptual framework: in closed economies, geographic concentration around the main capital is inevitable because it benefits producers to be near the largest consumption center. When an economy opens up and stabilizes, that logic reverses.
“If you give the country stability, openness, better infrastructure, and you lower the cost of capital, a lot of things will emerge, and many of those things will come from the interior,” he argued. He mentioned the case of Córdoba as a potential regional logistics hub—”a two-hour flight from anywhere in the country, like Atlanta in the United States”—and pointed out timber development in Corrientes and Misiones, where there is even talk of installing a cellulose plant, something unthinkable just a few years ago.
Agribusiness, he added, will also benefit for reasons that go beyond a potential reduction in export taxes: the end of the dual exchange rate, advancements in intellectual property, and expansion into new production segments set the stage for sustained growth. As a benchmark for what can happen when openness and stability are combined, he cited the case of Chilean cherries: growing from 35 million dollars exported in 2004 to over 3 billion dollars last year.
Services, Tourism, and Construction: The Urban Opportunity
Beyond the productive interior, both economists identified urban sectors with high development potential, precisely because investment had been practically paralyzed since 2011.
Buscaglia listed several: high-end hospitality—with projects like the renovation of the Plaza Hotel or the Sofitel tower in Puerto Madero—the expansion of shopping centers, and the return of international retail chains that had previously abandoned the Argentine market. “There are a lot of things that were done everywhere else that weren’t done right here in Buenos Aires,” he stated.
Sica elaborated on the role of the service sector as a major driver of future employment. “Future employment is not in industry; it is in services,” he said, pointing to the entertainment, gastronomy, and hospitality complex as one of the largest potential employers for the entire region. To that, he added construction—both infrastructure and private residential, which will stop serving as a store of value once the financial system normalizes—and healthcare services in the interior, where current infrastructure is insufficient for the demand that new investments will generate.
Perhaps the most disruptive takeaway from the panel was Sica’s warning against traditional sectoral analysis. In an economy shifting its relative prices, intersectoral income is redistributed, and within the exact same sector, companies that export, companies that import and revamp their model, and companies that close down can all coexist. “Sectors are not going to disappear; they are going to reassemble and reorganize,” he affirmed.
The example he provided was illustrative: in the home appliances sector, a company from Córdoba exports spin dryers to the United States, another manufactures a single model and completes its product line with imports from Mexico, and a third stopped assembling altogether. Three different business models within the same sector, responding to the same price signals. “Look for business units, see which supply chain they are in,” he recommended to the audience.
Crossing the Desert
Both economists acknowledged that this transformation does not come without costs. Buscaglia described the current situation as “crossing a desert”: the government is executing two massive transformations simultaneously—changing the economic matrix and driving disinflation—which creates inevitable tensions.
Infrastructure bottlenecks in Neuquén, San Juan, and Catamarca are already visible, and the capacity to provide schools, roads, hospitals, and housing at the pace demanded by approved investments is, according to Buscaglia, “in question.”
However, the underlying diagnosis remains optimistic. “If we manage to make these two turns and not die trying, what lies ahead is excellent,” Buscaglia summarized. Sica added a timeline to this outlook: the 25 billion dollars already approved under the RIGI (Incentive Regime for Large Investments, a legal framework approved in 2024 offering fiscal, customs, and exchange rate stability for 30 years to investment projects exceeding 200 million dollars in strategic sectors like energy, mining, and technology) and the 70 billion dollars currently under evaluation will materialize strongly over the next four years, with mining accelerating especially starting this year following the clarification of the regulatory framework on glaciers.
Private banking and wealth management clients are optimistic about the developments and implications of AI over the next five years, but at the same time, they are reorienting their portfolios toward more prudent positions in the face of rising geopolitical instability and global uncertainty.
This emerges from the conclusions of the study ‘Investing for Change: Client Strategies and Concerns’, which Deutsche Bank published based on data from a survey of its Private Bank clients conducted between March and May 2026, complemented by another somewhat shorter monthly survey of clients and non-clients. Respondents expect technological advancements within a context of continuous global and social turbulence. Notably, younger respondents (aged 25 to 40) are more pessimistic than older ones regarding issues related to geopolitics or social and environmental cohesion, while this trend reverses when it comes to artificial intelligence.
Specifically, AI, government debt and fiscal pressures, and policy-driven changes in trade patterns are perceived as the main drivers of change by 69.8%, 56.9%, and 50% of respondents, respectively; meanwhile, health security and pharmaceutical advancements ranked as the least influential topics. In fact, 77% are certain that AI will affect most aspects of business and investment. Furthermore, 70.2% believe that higher levels of defense spending will be necessary, and 49.9% are of the opinion that corporate governance must change radically to tackle all of these new global challenges.
Deutsche Bank Chart. Source: Deutsche Bank Client Survey Investment Portfolio Composition
Given this context, a long-term vision dominates the current objectives of investment portfolios. Specifically, 68.3% of private banking clients state that their goal is the long-term preservation of their wealth, and 65.2% point to consistent long-term returns. Only a minority of respondents (17.8%) affirm that achieving maximum returns is a current objective for their portfolio. Furthermore, only 3.3% have non-financial goals such as environmental or social impact. Caution and selective conviction also prevail in investment plans. For many investors, strategic and tactical approaches will coexist. Around 36.1% plan to review their strategic asset allocation, but 47% will adopt a more tactical approach as opportunities arise. It is also interesting to note that 29.7% will expand and seek new risk management approaches.
Only a minority plan major shifts toward specific themes or assets. For instance, only 9% foresee increasing exposure to technology and AI themes, followed by health/pharma and medicine (7.5%), energy and renewables (4.1%), and defense (3.9%). Regarding ESG matters, 15.1% plan to increase their investment, while 9.5% plan to reduce it. By country, according to Deutsche Bank’s dbInsights survey platform—which targets a broader audience in Germany, France, Italy, the United Kingdom, and the US—AI is consensus-ranked as the top investment theme, followed by renewable energy and biotechnology. In terms of risks, continental Europe is most concerned about geopolitical instability, whereas the US and the UK are more wary of government policy and regulation.
CC-BY-SA-2.0, FlickrAndrea Rossi, Chief Executive Officer of M&G plc, the parent company of M&G Investments.
M&G is experiencing one of the strongest periods in its recent history. After returning to a solid growth trajectory, the asset manager has once again posted strong net inflows while reinforcing its international expansion strategy, driven in particular by the partnership reached last year with Japanese insurer Dai-ichi Life, now one of its largest shareholders and a strategic partner for expanding its business across Asia.
Funds Society recently attended the Media Forum organized by M&G Investments at its London headquarters, where the firm’s senior executives shared their views on the evolution of the business and the key trends shaping the investment industry.
Organic Growth at Double-Digit Rates
“Growth is what defines us.” With that message, Andrea Rossi, CEO of M&G plc, summarized the firm’s roadmap, which is built around sustained growth supported by what he considers a differentiated business model.
“Our business model is our competitive advantage, and our focus is on continuing to grow,” Rossi emphasized.
Rossi explained that 2025 was an exceptional year for M&G, with €9.1 billion in net inflows, a trend that continued into 2026, with positive net inflows during the first quarter.
Today, M&G Group manages €430.5 billion in assets, of which €394.5 billion is managed by M&G Investments. While the firm remains predominantly invested in listed assets (€302 billion), it has significantly expanded its private assets business in recent years, which now totals €93 billion, according to company data.
Rossi highlighted the strong performance of M&G’s European private markets business, a market now approaching €90 trillion and growing at roughly 10% annually—a pace the firm has successfully matched. At the same time, its international business—primarily Continental Europe and Asia—is expanding at approximately 6% annually, while M&G itself is growing at double-digit rates across those regions.
The CEO stressed that organic growth remains the firm’s top priority, although he left the door open to selective acquisitions.
“We want small acquisitions that we can successfully scale within our private assets platform,” he said.
Asia: M&G’s International Growth Engine
International expansion was perhaps the most recurring theme throughout the event.
For Rossi, “international expansion is key,” with Japan occupying a central role in that strategy. Dai-ichi Life’s investment in M&G has strengthened a partnership that extends well beyond the shareholder relationship. In addition to distributing M&G’s products in Japan, the two firms also collaborate in asset management. M&G also maintains a strategic partnership with Mizuho, one of Japan’s largest banks.
Rossi explained that Japan presents an exceptional opportunity for both institutional and retail investors. An aging population, increasing life expectancy and a prolonged low-interest-rate environment have created substantial demand for long-term savings and investment solutions. Against that backdrop, M&G sees significant potential to capture part of the nearly $4 trillion currently held in Japanese bank deposits.
The partnership with Dai-ichi Life is also serving as a platform for accelerating growth across the rest of Asia.
M&G already has an institutional presence in Hong Kong, South Korea, Japan and Australia, while also distributing products in Taiwan. Today, the firm’s Asset Management division oversees approximately €17 billion in assets across Asia, a figure the company expects to grow as insurers, pension funds and sovereign wealth funds throughout the region increase their allocations.
“What has defined our growth has been a truly international effort. Once you decide to expand internationally, you need a very clear strategy and an equally strong ability to execute,” added Micaela Forelli, CEO of Europe Asset Management Operations at M&G Investments.
Forelli stressed that consistently delivering strong investment performance remains the firm’s first priority, but added that success also requires efficient operating models and effective use of available regulatory frameworks.
She highlighted the development of the UCITS industry over the past decade, describing it as one of Europe’s greatest financial exports.
“UCITS funds have become a global standard,” she said.
As an example, she noted that M&G’s Luxembourg fund structures are already distributed across 27 countries, although the potential is considerably greater, given that UCITS products are now marketed in 50 markets worldwide.
International growth opportunities, however, extend beyond geographic expansion.
Joseph Pinto, CEO of Asset Management at M&G Investments, argued that the transformation of pension systems represents one of the industry’s most significant long-term structural drivers.
Across Europe, many countries are introducing reforms to encourage defined contribution pension plans, following the path pioneered by the United Kingdom. Germany is expected to be one of the next examples.
“An increasing number of countries need to strengthen their retirement savings systems, creating a tremendous opportunity for our industry,” Pinto said.
He added that Asia offers even greater long-term potential. Unlike Europe or the United States, many Asian markets remain at a relatively early stage of development, with a growing number of individual investors beginning to seek long-term savings and investment products.
From an investment perspective, Pinto argued that Europe has once again become highly attractive for international investors.
The need to finance infrastructure, defense and new industrial capacity is creating opportunities across both public and private markets.
“We don’t aspire to be everything to everyone, but we do want to become a leading investment manager in Europe,” he said.
Private Assets, Diversification and Structural Megatrends
The third major theme of the event centered on the structural shifts reshaping institutional portfolios—changes that M&G believes strongly favor its positioning.
Rossi argued that Europe continues to attract strong interest from global investors and that, within private markets, the region is currently even more attractive than the United States.
That growing appeal is reflected in rising demand from European institutions as well as Asian and North American investors for infrastructure, private credit and European real estate.
Rossi framed this evolution within several megatrends that will drive investment demand over the coming years.
The energy transition, infrastructure development, Europe’s push for greater energy independence, rising defense spending and the investments required to deploy artificial intelligence will all require enormous amounts of capital at a time when European governments are already carrying high debt burdens.
“Governments are highly indebted, which means private markets and capital markets will need to play a greater role in financing these investments. We have the opportunity to support infrastructure that enables the energy transition, and given our expertise, this represents a tremendous growth opportunity for us,” Rossi said.
In his view, investor interest will continue to grow because Europe is undergoing a fundamental transformation in how its economy is financed.
Historically, European companies have relied much more heavily on bank lending than their U.S. counterparts. However, banks are reducing certain types of lending on their balance sheets, creating expanding opportunities for private capital.
While Rossi acknowledged that Europe remains a complex market—with different regulatory frameworks and business practices across countries—he believes that complexity is no longer the obstacle it once was. Greater political stability and increasing international interest are helping drive a rebalancing of global portfolios toward the region.
Pinto confirmed that this trend is already evident in conversations with clients.
Since last year, he said, an increasing number of investors have been modestly reducing their exposure to the United States while increasing allocations to Europe and Asia.
“This doesn’t mean abandoning the United States, which remains a priority market. It means building more balanced and diversified portfolios,” he explained.
He added that diversification is taking place not only across regions but also across asset classes, with investors gradually shifting allocations from public to private markets.
“M&G is exceptionally well positioned to support that transition,” he said, citing the firm’s combination of active management expertise, innovation capabilities and access to permanent capital through the balance sheet of Prudential, the group’s parent company.
Finally, Kathryn McLeland, Chief Financial Officer of M&G plc, explained that the firm’s growth has also been supported by significant reinvestment.
After exceeding its cost-saving targets over the past three years, the company has been able to reinvest approximately €140 million into the business, allocating more than half of that amount to its asset management division, particularly toward strengthening its private assets capabilities.
At a time when geopolitical uncertainty has become an increasingly prominent concern for investors, a growing share of the LP community is looking to reduce the number of asset managers with which they maintain relationships. That is one of the key findings of the latest Global Private Capital Barometer from Coller Capital, published for the Northern Hemisphere summer, which shows an increasing proportion of investors planning to streamline their manager rosters.
According to the report, 23% of the limited partners surveyed said they intend to reduce the number of investment firms in their portfolios going forward. This represents a notable increase from the last time Coller included this question in its investor survey, in 2020, when only 16% of LPs planned to reduce the number of manager relationships.
Even so, more investors still intend to expand their manager lineup than reduce it. Thirty-eight percent of respondents expect to increase the number of managers in their portfolios.
With respect to asset classes, Coller noted that 57% of respondents do not anticipate making significant changes to their overall allocations. However, the survey does reveal cooling enthusiasm for private credit and infrastructure strategies.
Compared with the previous edition of the barometer, the proportion of investors planning to increase their allocation to private credit fell from 42% to 29% over the past six months. For infrastructure assets, the figure declined from 39% to 31% during the same period.
“This may simply represent a natural pause following periods of rapid growth for both asset classes, but the recent negative headlines surrounding private credit are also likely influencing LPs’ allocation plans,” the firm said in its report.
That does not mean investors are turning away from the asset class altogether. Coller emphasized that an “overwhelming majority” of respondents—87%—plan to either maintain or increase their private debt investments over the next 12 months.
What Is Driving Investment Decisions?
Global investors continue to allocate capital to alternative markets, with their long-term investment horizon providing some protection against short-term shocks.
“For that reason, it is not surprising that LPs continue deploying capital into private markets, even amid the unpredictable course of global events,” Coller Capital said in the report.
The survey found that one-third of limited partners expect to accelerate the pace of their commitments over the next two years, while 57% expect to maintain their current pace.
Moreover, 63% of respondents said the geopolitical environment has not altered its influence on their investment allocation decisions. The remaining respondents indicated that geopolitical considerations are playing a greater role in their decision-making process.
Coller noted, however, that the regional breakdown presents a more nuanced picture.
“Among our North American respondents, just under one-quarter (23%) said geopolitics plays a greater role than before. By contrast, investors in other regions appear considerably more concerned,” the report stated, with roughly half of investors in both Europe and Asia indicating that geopolitical developments have become a more significant factor in their investment decisions.
Hedge funds, which have maintained significant long positions in technology broadly—and in semiconductors and hardware in particular—are beginning to consider taking profits. On Tuesday, the Nasdaq posted one of the largest point declines in its history.
However, important technical factors also amplified the selloff in AI-related stocks. Assets invested in leveraged ETFs tied to technology or semiconductor indexes—such as TQQQ, SOXL, or MUU, the 2x leveraged ETF linked to Micron shares—have surged (+39% for the first, +261% for the second), with the category now approaching $190 billion in assets, an unthinkable figure just five years ago. The well-known 7709—the largest 2x leveraged ETF tracking SK Hynix, the memory chip manufacturer—has reached $16 billion in assets, while the Direxion Daily MU Bull 2X Shares ETF linked to Micron is approaching a market capitalization of $8 billion.
A 2x or 3x leveraged ETF must rebalance its exposure every day to maintain its leverage multiple. If the underlying index rises, the fund must buy additional exposure at the close; if it falls, it must sell. This daily rebalancing creates what is structurally a short gamma profile: buying into strength and selling into weakness. The more assets these products accumulate, the larger the mechanical trading flows generated by every market move.
This dynamic is amplified further because positioning is concentrated in only a handful of names. Memory and semiconductor stocks account for more than 10% of hedge funds’ long exposure, while roughly three-quarters of short gamma exposure is concentrated in semiconductors, the Nasdaq-100 (NDX) and related names. When the same hedging activity repeatedly impacts the same stocks, price movements become concentrated rather than dispersed.
The situation becomes even more complex when considering that the volatility of the stocks that have contributed most to the S&P 500’s appreciation is approaching the levels seen at the peak of the dot-com bubble. Given that those returns are concentrated in just a handful of stocks and sectors, portfolio risk management becomes significantly more challenging. At the same time, the risk of gamma-driven market effects increases if retail investors begin exiting leveraged products en masse. The resulting volatility drag could trigger a wave of investor dissatisfaction with these leveraged ETFs.
This mathematical effect, which is particularly pronounced in leveraged and inverse ETFs that must rebalance their exposure to the underlying asset on a daily basis, results in a gradual loss of value caused by day-to-day price fluctuations—even when the underlying asset ultimately returns to its original level.
Consider a simple example: an index falls by 10% and then rises by 10%. An unleveraged fund would decline from $100 to $90 and then recover to $99 after the rebound. A 3x leveraged ETF, however, would recover only to $91 following the same movement in the underlying index.
The recent volatility in semiconductor stocks—as reflected in the Philadelphia Semiconductor Index (SOX)—provides an ideal environment for this effect to materialize.
Micron’s earnings, released Wednesday evening, exceeded already ambitious expectations and could continue to support capital flows into leveraged products. However, this momentum is accompanied by increased market instability that should not be underestimated.
In addition, efforts to manage memory chip supply bottlenecks are beginning to spill over into consumer prices and inflation readings. Apple’s announcement of 15% to 25% price increases for Macs and iPads, beyond its implications for the company itself, suggests that the strategy of capitalizing on supply constraints may be reaching its limits.
Global Macro: PMIs Improve While Energy Prices Decline
The volatility in equity markets contrasts with the constructive economic data released this week. June flash PMI readings generally surprised to the upside, suggesting that the global economy continues to absorb the energy shock better than expected.
The U.S. composite PMI rose to 52.2 in June, its highest level since the onset of the conflict with Iran. In the eurozone, the composite PMI also exceeded expectations, coming in at 49.5 versus the 49.2 consensus forecast. Taken together, the data paint a constructive picture of the global economy as the second quarter draws to a close.
Markets also received another supportive tailwind in the form of lower energy prices. Brent crude fell to $73.80 per barrel, its lowest level in three months, reflecting the beginning of a normalization of maritime traffic through the Strait of Hormuz.
Dollar and the Fed: Enduring Dominance, but an Opportunity to Reduce Exposure
With the U.S. economy showing stronger momentum than Europe’s, the euro this week broke below its summer 2025 lows against the U.S. dollar.
The dollar’s dominance no longer appears to be under serious challenge. Neither the euro nor the renminbi represents a credible rival over the short to medium term. The euro continues to face unresolved questions in the absence of a genuine fiscal union—as illustrated by France’s budgetary difficulties in 2025. Meanwhile, the Chinese renminbi (CNY) would require a fully open capital account and much deeper, more liquid financial markets before becoming a meaningful alternative, a process that could take decades.
In reality, central banks have not been selling dollars; rather, they have been diversifying their reserves into other currencies. That diversification, concentrated in smaller currencies such as the Canadian and Australian dollars, has risen from 2% to 11% since 2000—a shift that remains far too small to undermine global demand for the U.S. dollar.
The global savings surplus generated by China, the eurozone, Japan and the Gulf countries continues to be structurally recycled into U.S. assets because only the United States offers financial markets with sufficient depth and liquidity to absorb those flows. Net foreign capital inflows into U.S. assets have returned to record highs, and that trend is likely to persist as long as artificial intelligence continues to drive the S&P 500 and Nasdaq as leaders of global equity markets.
Structurally, the dollar remains an expensive currency, and with concerns over the end of U.S. exceptionalism having largely subsided for now, its valuation will depend primarily on inflation-adjusted interest rate differentials.
The yield curve still implies one additional rate hike between October and December. Lower oil prices will reduce inflation expectations while supporting corporate profit margins. However, accumulated supply shocks—including tariffs and higher energy costs—continue to feed through into inflation data. Indicators such as supply chain stress, order backlogs and delivery times suggest that core inflation may peak somewhat later than previously expected. Even so, conditions in the labor market appear to be improving.
The Federal Reserve is likely to maintain a restrictive bias in the coming months, but the most probable scenario is that it remains on hold for the rest of the year—neither raising rates nor cutting them until 2027, when disinflation is expected to resume more forcefully.
There are four reasons why U.S. inflation could eventually surprise to the downside. First, the New York Fed’s inflation gauge suggests that the recent inflation rebound has been driven primarily by supply-side factors. Second, declining crude oil prices should pull inflation expectations lower. Third, distortions resulting from the government shutdown will gradually fade from the data. Finally, the adoption of artificial intelligence is boosting labor productivity at annual rates approaching 3%, while unit labor costs have fallen sharply.
For all of these reasons—and given the U.S. dollar’s tendency to exhibit momentum—it is plausible that the currency could appreciate somewhat further in the short term, as our model suggests. Nevertheless, all indications point to this being an attractive opportunity to reduce exposure to the dollar.
The U.S. venture capital market displayed a sharply divergent pattern during the first five months of 2026: investors completed slightly fewer transactions but deployed substantially more capital than during the same period a year earlier.
According to GlobalData, the total number of venture capital deals announced in the United States declined by 2% year over year between January and May 2026, while total funding value more than tripled.
“This divergence reflects a clear trend toward larger funding rounds and highly selective megadeals. It reinforces the United States as the undisputed epicenter of global venture capital value creation, even amid a modest slowdown in overall deal activity. It is also worth noting that much of this increase in funding value was driven by multibillion-dollar investments secured by a handful of artificial intelligence startups,” said Aurojyoti Bose, Lead Analyst at GlobalData.
Why the U.S. Remains the Global Leader
Among the most notable U.S. financing rounds during the January–May 2026 period were OpenAI’s $122 billion fundraising, Anthropic’s consecutive funding rounds of $65 billion and $30 billion, and xAI’s $20 billion capital raise, among others.
Analysis of GlobalData’s financial deals database shows that despite the decline in transaction volume, the United States maintained its global leadership, accounting for approximately 30% of all venture capital deals announced worldwide between January and May 2026.
At the same time, the sharp increase in deal value propelled the U.S. to capture an overwhelming 81% of global venture capital investment, underscoring the country’s outsized influence in shaping international capital allocation trends.
According to Bose, “the substantial gap between the U.S. share of deal volume and its share of funding value highlights a market characterized by larger average check sizes and a high concentration of capital in high-conviction investment opportunities.”
Other Venture Capital Hotspots
Compared with other major markets, the United States continues to outperform its competitors by a wide margin.
China, the world’s second-largest venture capital market, experienced a strong rebound. The number of transactions increased by approximately 41% year over year, while total deal value surged by around 220%. As a result, China accounted for 23% of global venture capital deal volume and 7% of global funding value. Although these figures point to renewed momentum, China’s share of total investment value remains only a fraction of that of the United States.
The United Kingdom accounted for 7% of global deal volume and 3% of total funding value, while India represented 8% of global transactions but just 1% of worldwide funding value.
“Compared with the U.S., venture capital activity in these markets points to considerably more cautious investor sentiment and a lower frequency of large-scale financing rounds during the period,” GlobalData noted.
Assets in active ETFs reached a new all-time high of $2.49 trillion at the end of May, driven by a record $412 billion in year-to-date net inflows. According to ETFGI’s latest monthly report, the global active ETF industry attracted $100.08 billion in net inflows during May alone, bringing total inflows for the first five months of 2026 to $411.75 billion.
According to the report, assets have increased 28.8% year to date, up from the $1.93 trillion recorded at the end of 2025, reflecting the increasingly strong and accelerating adoption of active investment strategies in the ETF format.
“Year-to-date net inflows through May—$411.75 billion—are the highest ever recorded, shattering the previous record of $220.53 billion during the same period in 2025. With this performance, the industry has now posted 74 consecutive months of net inflows, reinforcing a sustained structural shift toward these investment solutions worldwide,” ETFGI noted.
A breakdown of the flows shows that active equity ETFs led subscriptions, attracting $60.97 billion in net inflows during May. Year to date, they have gathered $242.18 billion, significantly higher than the $124.28 billion recorded during the same period in 2025.
Meanwhile, active fixed income ETFs posted $26.12 billion in net inflows in May. Total year-to-date inflows reached $136.73 billion, compared with $82.09 billion through May 2025, underscoring investors’ continued appetite for income generation and portfolio diversification.
Leading Asset Managers
Dimensional remains the world’s largest active ETF provider by assets under management, with $296.82 billion and an 11.9% market share. It is followed closely by J.P. Morgan Asset Management, with $291.38 billion in assets (11.7% market share), while iShares ranks third with $168.64 billion (6.8% market share).
According to ETFGI, these three firms—out of 717 providers operating in the market—collectively account for 30.4% of global active ETF assets, while none of the remaining 714 providers individually holds a market share of more than 6%.
For decades, sports sponsorship was viewed primarily as a marketing tool. That has long ceased to be the case when it comes to the FIFA World Cup. Today, the tournament has become a platform for corporate geopolitics, where energy, technology, financial, aviation and consumer companies compete for something far more valuable than visibility: global influence.
The reason is simple. No other sporting event combines such a vast audience, geographic diversity and cultural reach. FIFA’s figures are compelling: the 2022 Qatar World Cup generated engagement with approximately 5 billion people across television, digital platforms and social media, while the final between Argentina and France attracted an estimated 1.42 billion viewers worldwide—the largest audience in the tournament’s history.
With the 2026 FIFA World Cup, hosted by Mexico, the United States and Canada, the phenomenon will become even larger. The tournament has expanded from 32 to 48 teams, increased from 64 to 104 matches, and will be played in North America—the world’s most lucrative advertising market.
The World Cup has become a $13 billion business, and the tournament’s expansion is reshaping FIFA’s own finances. The organization projects $11 billion in revenue for the 2023–2026 cycle, a 70% increase over the previous cycle, driven primarily by the commercialization of the North American World Cup.
The expected revenue breakdown illustrates the scale of the event: $4.264 billion from broadcasting rights, $3.097 billion from hospitality and ticket sales, $2.693 billion from marketing and sponsorship rights, $669 million from licensing, and $277 million from other revenue streams, according to FIFA. However, several estimates place the tournament’s total economic impact at $13 billion, making it the most profitable sporting event in history.
Energy: From oil to corporate diplomacy
The presence of energy companies in football is no longer coincidental. Oil and gas producers increasingly seek to associate their brands with innovation, sustainability and global connectivity, particularly as the energy transition reshapes the industry. Sports sponsorship has become a form of corporate and national soft power.
The clearest example was Qatar’s strategy during the 2022 World Cup, where international exposure helped reinforce both the country’s geopolitical position and that of its energy companies in Western markets. For hydrocarbon producers and state-owned energy firms, football offers something traditional advertising cannot buy: global legitimacy and emotional connections with consumers and investors.
Technology: Competing for the digital ecosystem
For technology companies, the World Cup represents the ultimate showcase for their data ecosystems, artificial intelligence capabilities and digital services.
The opportunities extend far beyond stadium advertising, encompassing AI-enhanced broadcasting, cloud infrastructure for data processing, real-time analytics, programmatic advertising, cybersecurity, immersive experiences, augmented reality and e-commerce linked to sports broadcasts, among many other applications.
According to FIFA’s post-tournament report, the Qatar World Cup generated 2.7 billion digital and streaming interactions, along with 2.2 billion social media engagements—figures that surpassed those recorded during Russia 2018 and were validated by many of the world’s leading technology companies.
For major technology firms, the tournament is arguably the only event capable of simultaneously delivering global scale and highly sophisticated digital audience segmentation.
Payments: The World Cup as a financial laboratory
The payments industry is arguably the sector that derives the greatest strategic value from these partnerships.
Every fan represents a potential cardholder, digital wallet user, cross-border consumer and future retail investor.
Sponsorship allows companies to transform a sporting event into a platform for accelerating the adoption of digital payments and financial services. It is no coincidence that global payments giants invest hundreds of millions of dollars in sponsorship agreements before committing even larger sums to activation campaigns across dozens of countries.
Some estimates suggest that top-tier global sponsors may spend more than $100 million solely for association rights with the tournament, excluding additional expenditures on marketing campaigns and brand activations.
Aviation: Capturing the growth of global tourism
Airlines use football for far more than selling tickets.
Air connectivity has become strategic infrastructure for international trade and tourism. For airlines, the World Cup represents opportunities to expand route networks, strengthen international hub positioning, enhance loyalty programs, increase premium passenger traffic and attract corporate travelers.
The 2026 edition will span 16 host cities across three countries, generating tens of millions of passenger journeys during just over one month of competition.
Consumer goods: The final frontier of mass marketing
Few industries understand the value of the World Cup better than consumer goods companies.
The tournament remains the only event capable of simultaneously driving impulse purchases, family consumption, higher spending on food and beverages, official merchandise sales and e-commerce growth.
The Qatar World Cup generated more than 15 billion social media impressions and over 3.6 billion video views, extraordinary levels of engagement for consumer-facing brands.
What does this mean for investors?
From the perspective of financial markets and investment funds, the World Cup acts as a catalyst for multiple sectors.
Historically, major sporting events generate temporary spikes in revenue and brand visibility. However, the real value for investors lies in companies’ ability to convert that exposure into long-term customer growth and geographic expansion.
The World Cup has evolved from a competition among national teams into a contest among economic models, global brands and national strategies of influence.
Companies no longer sponsor football simply to sell more soft drinks, airline tickets or credit cards.
They do so because, for one month, the World Cup commands the attention of a large share of the world’s population and offers something extraordinarily scarce in today’s digital economy: a truly global, simultaneous and emotionally engaged audience.
From a geopolitical and financial perspective, few investments provide such significant potential returns in terms of global visibility and strategic positioning.
LinkedIn / Kathleen M. Hutchinson, Director of the SEC Office of International Affairs.
The U.S. Securities and Exchange Commission (SEC) has announced the appointment of Kathleen M. Hutchinson as the new Director of the Office of International Affairs (OIA). The OIA is the department responsible for advising the Commission on international policy, coordinating with regulatory authorities around the world to facilitate cross-border oversight and enforcement, and providing technical assistance.
Hutchinson had served as Acting Director of the OIA since January 2025. Her career at the SEC began in 2003 as a staff attorney in the Office of Compliance Inspections and Examinations (now the Division of Examinations), before joining the OIA in 2008. Within the office, she has held several leadership positions, including Associate Director and Deputy Director, and has served twice as the office’s Acting Director.
“Kathleen has demonstrated a deep commitment to public service and to our mission for more than two decades. I greatly appreciate her willingness to take on the permanent leadership of the Office of International Affairs. She has successfully led numerous international initiatives alongside our counterparts abroad, and I have complete confidence in her continued leadership and guidance on international policy and cooperation,” said Paul S. Atkins, Chairman of the SEC.
For her part, Kathleen Hutchinson said: “The extraordinary talent of the team in the Office of International Affairs makes it a true privilege to work every day in service of investors and our markets. Advancing the SEC’s international priorities through collaboration with foreign counterparts—on policy and supervisory matters, as well as enforcement and technical assistance—is essential to enabling the SEC to fulfill its mission. I am grateful to Chairman Atkins for this opportunity and look forward to continuing to work with the Commission, my colleagues at the SEC, and international authorities to address the regulatory challenges facing global markets today.”
Hutchinson holds a Juris Doctor and a master’s degree in International Relations from the Washington College of Law and the School of International Service at American University, as well as a bachelor’s degree from Binghamton University. She began her legal career in private practice at law firms in Washington, D.C., and New York.
