HSBC Global Viewpoint Under the Banyan Tree – Is a generational investment shift upon us?
Sep 11, 2025
Recent discussions highlight a potential generational shift in global investments, particularly as Asian investors redirect funds away from the U.S. market. Concerns over the weakening dollar and rising national debt are driving diversification towards lower-debt assets in Asia. The impact of rising U.S. borrowing rates poses challenges for American firms but opens doors in emerging markets. This shift could also enhance market liquidity in Asia, supporting economic growth while presenting challenges in attracting investment capital due to governance issues.
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Beginning Of A Real Diversification
- Investors are starting a structural diversification away from the US driven by a weakening dollar and risk concerns.
- Harold van der Linde sees this as the beginning of a multi-year shift rather than a short blip.
US Debt Could Raise Cost Of Capital
- Concerns about rising US debt and interest costs may push foreign investors to demand higher yields or shift capital elsewhere.
- Fred Neumann argues that higher US risk-free rates would raise global cost of capital and reduce US equity returns.
Skewed Flows Could Normalize
- The US has been disproportionately large in global capital flows, creating a skew that may normalize if flows diversify.
- Herald van der Linde notes that recycled capital into Asia would lower local cost of capital and boost liquidity.