Global stock markets record their largest annual increase in six years, with investors facing high valuation challenges in 2026

【BlockBeats】A year-end review of the performance of global stock markets. The Federal Reserve's interest rate cuts and the continued surge in AI investment enthusiasm have led to significant gains in the global stock market in 2025— the MSCI Global Equity Index has increased by 21% for the year, the largest annual gain in six years.

Asian markets are even more vigorous, with stock prices rising for the third consecutive year, marking the best performance since 2017. Optimistic expectations around economic growth, corporate profits, and a loose monetary environment have driven the entire market to rebound strongly from the April correction, ultimately reaching a historic high.

However, as we enter 2026, the market needs to stay alert. Investors face two questions: first, current stock valuations are at relatively high levels; second, policymakers are divided on further easing policies. Amanda Agati, Chief Investment Officer of Panix Asset Management Group, bluntly states, "For the market to continue higher next year, the Fed needs to be moderate."

Looking at historical data, there are still reasons to remain cautiously optimistic. Over the past ten years, the MSCI Global Equity Index has averaged a 1.4% increase in January, with six of those years seeing gains. In other words, the start of the new year is usually a good signal.