Asia will both drive and gain from dollar asset diversification

AS GLOBAL investors rethink their exposure to US financial assets, a mix of economic pitfalls and shifting US policy will prompt a gradual shift in how and where capital is allocated.

At the heart of this shift lies Asia – poised to drive and benefit from the transition – and if managed well, it could emerge as a key destination for global capital in the years ahead.

The US economy faces long-term economic issues amid tighter policies on trade and immigration that risk weakening potential growth and dragging corporate performance. Meanwhile, rising external debt levels and large budget deficits raise questions about the long-term financial stability of the world’s largest economy. These issues are denting the appeal of US financial assets.