KKR, a U.S.-based investment giant, released its mid-year report on June 11, 2026, highlighting that the AI-driven productivity boom is only just beginning, but warned that growth will become increasingly concentrated in a few sectors [1]. Henry H. McVey, KKR's head of global macro and asset allocation and CIO of the KKR balance sheet, stated that intensifying strategic competition could lead to economic growth being more concentrated and, at times, more extreme than anything seen since the second industrial revolution in the 1870s [1].
McVey described an investing landscape where some parts of the economy and markets are "starved," while others are "flush," with technology, high-end services, and government spending experiencing "enormously concentrated" growth [1]. KKR identified the defense and power sectors as the most likely winners in the long-term, citing a broad-based and growing focus on supply chain security and resiliency across nations and industries, despite higher input costs [1].
Among other key takeaways, KKR expects Asia to continue outperforming in public and private markets. McVey specifically mentioned Japan and Korea as "still look[ing] cheap," with earnings likely to surprise on the upside in both 2026 and 2027. However, KKR remains cautious on Chinese assets due to the property sector drag [1]. Despite this, KKR forecasts the Chinese yuan will strengthen as the U.S. dollar peaks, projecting a rate of about 6.5 yuan per dollar by 2027 [1].
In the agricultural sector, McVey noted that agriculture is increasingly joining energy security, defense, and critical minerals as a strategic, policy-backed sector likely to attract sustained investment. The USDA forecasts U.S. wheat production for 2026 to 2027 will be the lowest since 1972, with prices rising to three-year highs [1].
CONCLUSION
KKR's report signals a new era of AI-driven productivity, but warns of unprecedented concentration of growth in select sectors such as technology, defense, and power. Investors are advised to watch for upside surprises in Asian markets and sustained investment in strategic sectors like agriculture. The market takeaway is a mix of optimism for sector winners and caution regarding broader economic imbalances.