Technology sector: led the way, but leaders changed
The second quarter of 2026 in financial markets was marked by a recovery in risk appetite, despite geopolitical tensions and energy price fluctuations. The technology sector continued to lead the markets forward, yet the leaders within the sector changed. In previous years, rapidly growing major technology companies like Microsoft, Meta, or Tesla lost their growth trend. Meanwhile, technology equipment manufacturers took their place, with the semiconductor sector growing particularly fast, while software companies lagged behind.
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Artificial intelligence requires huge data centers and vast amounts of chips, which opens significant revenue opportunities for equipment manufacturers. The biggest winners were TSMC (+55%), Samsung (+147%), and SK Hynix (+274%) stocks. In the software sector, the mood was opposite: investors feared that AI could significantly reduce their revenues or even business models over time. Therefore, stocks of companies like Adobe, SAP, or Salesforce fell by more than 30 percent over the half-year.
Strong profits and expectations of an IPO boom
Corporate financial results and profitability strongly exceeded expectations, and investment activity related to artificial intelligence continues to intensify. Although some investors worry whether huge investments in data centers, cloud infrastructure, and semiconductors will pay off, these doubts hardly slowed the pace of stock market growth.
Among different regions, emerging markets stood out with more than 20 percent returns, led by South Korea and Taiwan, which have many technology companies. Japanese stocks also delivered solid returns, although foreign investors saw part of these gains “eaten” by a weaker yen. Meanwhile, US and European stocks lagged somewhat this year but still generated about 10 percent returns.
Positive market sentiment is also reflected in the accelerating IPO boom. In June, SpaceX, founded by Elon Musk, started trading shares, and the market is still awaiting companies like Anthropic, Stripe, or OpenAI.
Unrest in the Middle East increased inflation and forced central banks to abandon plans to cut interest rates. As a result, bond market returns remained more modest than stocks. However, corporate credit risk remained low, so corporate bonds slightly outperformed government bond returns.
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Strong results of SEB pension funds
Among lifecycle funds, riskier strategies performed best, with returns exceeding 12 percent over the quarter. Meanwhile, more conservative funds grew by 3-4 percent. Positive returns were contributed not only by the rise in global stock markets but also by alternative investments, which, although growing more moderately, also created significant value for clients.
A significant portion of our alternative investments has already reached a more mature development stage. Therefore, the so-called J-curve effect is becoming clearer – a stage when after initial investment years, investments start generating higher returns.
During the quarter, we actively took advantage of market fluctuations. We opened a small investment in the semiconductor sector, which we managed to realize profitably. We also increased the weight of information technology companies in portfolios and opened a position in smaller-cap US companies, which, in our assessment, had the potential to catch up with large companies after a longer lag period. At the same time, we closed a previously held investment in the energy sector, which, in our opinion, had already reached much of its potential.
Looking at the rest of the year, we remain constructively minded. So far, markets have successfully withstood all challenges. Neither trade wars, geopolitical conflicts, nor rising inflation have stopped the rally. Economic growth remains fairly strong, corporate profits are growing in many sectors, and no significant interest rate hikes are forecast yet. Still, it is important not to forget that such intensity of growth is not guaranteed – markets operate cyclically, with bull markets replaced by bear markets and vice versa.
Nevertheless, short-term volatility has limited impact on long-term investors. The most favorable strategy remains consistent investing and accumulating in a lifecycle pension fund appropriate for one’s age.
