Facing the Trump Effect: A Troubling Trend for US Markets
Wealthy Asians express concern over Trump's policies
Once eager to plough large sums into US assets, wealthy Asian investors are now turning their attention elsewhere due to growing concerns over President Trump's trade policies. Europe could potentially profit from this capital flight.
A recent report by Bloomberg reveals a shift in wealth: Some of Asia's most affluent families are steadily reducing their investments in the US. The media outlet spoke to a pool of ten 'family offices', which manage private wealth independently from banks. One of these offices, managing assets for Chinese billionaires, has even fully withdrawn from US holdings, intending to channel profits back to Asia.
The Great Retreat: Asia's reaction to Trump's Economic Policies
Clifford Ng, a partner at Zhong Lun, a leading law firm in Hong Kong, attests to this development. According to him, many in the Chinese business world, like those in other countries, initially looked forward to Trump the dealmaker, not Trump the protectionist. Ng believes this change in perception is primarily responsible for Asian investors' apprehensions.
Evidence of this trend can also be found in the Hong Kong-based Infinity Family Office. CEO Henry Hau reports that for the first time, some families are contemplating decreasing their investments in US assets. These families, who have weathered past financial crises without losing faith in US investments, are now considering redistributing 20 to 30 percent of their US portfolios to China and Europe.
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The full extent of this capital exodus remains unclear. US assets continue to occupy a significant share of many investment portfolios. A few family offices told Bloomberg they prefer a wait-and-see approach rather than sell off their holdings. Yet, three executives described the US as an unrivalled haven for investments. Despite the ongoing uncertainty, US stocks still hold their allure for many, albeit in the long run.
Reference(s)
- ntv.de
- jki
- Donald Trump
- Investors
- Wealth
- Trade Conflicts
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Impact of Trump's Trade Policies on Asian Ultra-High-Net-Worth Individuals' Investments in US Assets
President Trump's trade policies, particularly his escalation of tariffs, have significantly influenced Asian ultra-high-net-worth individuals (UHNWIs) investment strategies towards US assets.
Key Impacts
- Reduction in US Exposure:
- Asian UHNWIs are gradually withdrawing their investments in US assets due to rising unpredictability and market turbulence instigated by the trade war. In extreme cases, some have reduced US assets in their portfolio by as much as 60%, favouring safer investments like cash and gold.[2]
- This trend reflects a broader movement among Asian investors reassessing their exposure to US markets amid the trade tensions.
- Market Volatility:
- Trump's trade policies, including the imposition of a 145% tariff on imports from China, have fuelled market volatility. This volatility has undermined investor confidence in US assets, spurring some to diversify their portfolios away from US investments.[1][3]
- Diversification Strategies:
- Asian UHNWIs are examining alternative investment opportunities, such as emerging markets and other global assets, to mitigate the risks associated with the US-China trade tensions.[3]
- This diversification strategy is aimed at decreasing US market dependence and managing potential losses from continued trade disputes.
- Regional Market Resilience:
- Despite global market volatility, Asian equities have demonstrated resilience, with some investors viewing them as a safer haven compared to US assets affected by trade tensions.[3]
- This resilience can be attributed partly to the economic growth and stability in certain Asian markets, which are less impacted by Trump's trade policies.
- The trend of Asian ultra-high-net-worth individuals (UHNWIs) decreasing their investments in US assets is growing, as the trade policies of President Trump cause market instability and uncertainty.
- Some Asian investors are shifting their focus to Europe, potentially capitalizing on the funds withdrawn from US assets due to trade war fears.
- Clifford Ng, a partner at Zhong Lun, a leading law firm in Hong Kong, corroborates this trend, attributing Asian investors' apprehensions to a change in perception of Trump's economic policies being protectionist rather than deal-oriented.
- The Hong Kong-based Infinity Family Office reports that some families are contemplating a redistribution of 20 to 30 percent of their US portfolios to China and Europe, signifying a substantial shift in their employment policy towards global investments.
- Despite the ongoing uncertainty, US stocks still hold their allure for many, albeit in the long run, as some family offices prefer a wait-and-see approach rather than completely exiting US markets, demonstrating a notable employment policy in maintaining US assets.
