What Markets Will Benefit From Investor Rotation Out of the US?

Global investors are rotating out of the US to other international markets amid intensifying geopolitical concerns. Industry leaders at the Asian Financial Forum discussed where the beneficiaries could be from the shift. In the midst of heightened worries about geopolitical risks with Washington taking an aggressive stance early in 2026, global investors are exploring markets outside of the US. Last week, global equity funds recorded their largest outflows on record with $43.2 billion fleeing the market, according to a report by BofA Global Research, including $16.8 billion out of the US as part of a broader trend of rotation. «Last year, it seems that everything goes up in one direction. But how about this year? Do we see the kind of diversification that we see, seeing capital flows going to this part of the world? Would that continue? Would the asset allocation be different this year?» questioned Julia Leung, CEO of Hong Kong’s Securities and Futures Commission, as a panel chair during the Asian Financial Forum 2026. Hong Kong’s Opportunity According to Benjamin Hung, Standard Chartered’s international president and the chairman of Hong Kong’s Financial Services Development Council, policy volatility and uncertainty have driven investors to reflect on the risk-free rate of return in the new era and their portfolio composition, especially with regard to an overweight position on the US. As a result, more diversification could be underway and Hung noted that Hong Kong could play a key role as an international financial center and connector. This includes the city’s status as a top offshore renminbi hub, with growing issuance of dim sum bonds and yuan-denominated trade in the global South, as well as financing of the new economy via the local IPO market. «These are some of the areas that I do think are prime for Hong Kong to grasp,» Hung said on the panel. Sustainable Rise in the Middle East The Middle East has also been a major beneficiary in recent years, especially in the United Arab Emirates (UAE). H.E. Waleed Saeed Abdul Salam Al Awadhi, UAE’s capital markets CEO, shared that while every single asset class in its capital market has grown between double and triple digits, maintaining momentum is of utmost importance. «Now, is this sustainable? And this is the $1 billion question,» he said. «The best thing to do, we found out, is building bilateral agreements. I started with yourself in Hong Kong. Last year, we signed the first such kind – mutual recognition of funds – and we started seeing great inflow between the two [markets].» America: Still Dominant Nonetheless, panellists agreed that the US would continue to dominate as the world’s capital markets leader, albeit to a lesser extent. «Yes, there will be some diversification, but the reality is that there's approximately 70 trillion of […] global capital that's invested in the United States. That number was a little over 60 at the beginning of last year. So that number hasn't gone down. It's gone up,» explained Gokul Laroia, Asia CEO at Morgan Stanley. «The pace at which it's going up may slow down and there will be diversification, but there's not that many markets around the world that have the scale to absorb that kind of capital. Japan does to an extent. China does, but there's capital controls. Europe does, but again, it's not as big as the United States market.»