February in review

Global equities eked out a small gain in February, with the MSCI All Country World Index posting an approximately 1% rise (in USD). But there was wide dispersion in performance. The shares of companies seen as at risk from AI disruption sold off in the month. Software stocks bore the brunt, following the release of new coding tools by AI company Anthropic. But other perceived AI victims, including banks, were also caught up in the ‘fobo’ (fear of becoming obsolete) downdraft. The market was skittish, with a sharp wave of selling triggered towards month-end by a widely shared blog post that speculated AI could drive up the US jobless rate to >10% by 2028. Seeking businesses seen as less at threat, investors rotated towards the ‘physical economy’, with utilities, energy and materials stocks among the notable beneficiaries – a trade that quickly spawned another new acronym: ‘halo’ (heavy-asset, low obsolescence). By region, Japanese equities hit record highs, buoyed partly by confidence in domestic politics, with major European and UK stock-market indices also outperforming global equities. US shares lagged, reflecting the declines in tech stocks. Overall, emerging markets equities outperformed developed market stocks, with South Korea and Thailand among the notable outperformers.

Source: Bloomberg as at 28 February 2026.