🧠 Food for thought

Implications, context, and why it matters.

Decade-long US equity dominance shows signs of structural shift

• The current capital flow shift represents a notable break from recent history, where US equities attracted $1.2 trillion from global investors compared to just $200 billion for the rest of the world between mid-2020 and end-20241.
• This year marks a change, with investors now splitting their allocation 50/50 between US stocks and international markets, compared to the previous overwhelming US preference1.
• The S&P 500’s price-to-book ratio of 5.3 times represents the highest valuation since 1946, suggesting US stocks have become prohibitively expensive for many investors1.
• Asian markets are showing performance, with the MSCI Asia ex-Japan Index gaining 17% compared to the S&P 500’s 6% gain, while Asia attracted $6.02 billion in foreign equity inflows in June 2025 alone2.

Asia’s AI specialization creates trillion-dollar investment opportunity

• The global AI market is projected to quadruple from $300 billion in 2025 to nearly $1.2 trillion by 2030, with approximately $1 trillion of that investment potentially flowing to Asia-Pacific1.
• Each major Asian economy has developed distinct AI advantages: Taiwan provides cutting-edge foundries, South Korea supplies high-bandwidth memory, Japan offers sensors and precision robotics, while India delivers engineering talent1.
• China’s approach differs strategically from the US, focusing on “good enough” AI solutions to enable mass adoption rather than pursuing best-in-class technology, potentially creating faster commercialization opportunities1.
• The US still leads in raw AI investment with $470.9 billion committed for 2025 and $109.1 billion in private AI investment in 2024, but China is positioning to lead by 2030 through heavy patent development and open-source model creation34.