Asian and Middle Eastern Investors Seek to Diversify Away from US Assets Amid Policy Uncertainty

Strategic Insights -

Asian and Middle Eastern investors, including sovereign funds, are increasingly seeking to avoid exposure to US assets due to policy shocks under President Donald Trump, according to Partners Group, one of Europe's largest private markets investors. The uncertainty surrounding tariffs and potential trade or investment restrictions is driving these investors to consider non-US exposure. This trend is reflected in the growing number of clients asking to avoid US dollar-based accounts and instead opt for euro-based accounts or depository accounts with non-US banks.

Key Takeaways:

  • Partners Group reports that some sovereign wealth funds and institutional investors in the Middle East and Asia are asking to avoid US exposure entirely.
  • These investors are citing uncertainty around tariffs and potential trade or investment restrictions as the primary concern.
  • The firm has had discussions with a "handful" of clients, including some sovereign wealth funds, regarding non-US exposure.
  • The world economy may become more segregated and less integrated as a result of this trend, according to Partners Group.
  • The US needs to demonstrate stability to reassure investors, according to Partners Group's CEO, David Layton.
  • Some investors, such as Breitling's parent company, may be forced to raise US prices and incur sales losses due to high US tariffs.

Statistics:

  • Partners Group manages assets worth over $170 billion, with almost half of these assets in the US.
  • The firm has had "a lot" of discussions with clients regarding non-US exposure this year due to the new US administration.
  • Approximately 45% of Partners Group's assets in the US are in the technology sector, while 25% are in healthcare and life sciences.
  • The US is considered a "far bigger market" for technology companies and healthcare and life sciences investments than Europe.

Sources:

  • "Executives at Partners Group told the Financial Times that some funds" (Financial Times)
  • "Partners Group reported managing assets worth $170bn" (Financial Times)
  • "The world becomes a bit more segregated and less integrated also, with regards to the financial system" (Partners Group)
  • "If people get the sense ... change is an every-year thing and there's not as much stability" (Partners Group)
  • "The US is just a far bigger market for technology companies" (Partners Group)
  • "We love to invest in technology in Europe" (Partners Group)