US-China trade war pushes investors to rest of Asia

Photo credit: Financial Times

With the world’s two biggest economies locked in a trade war, the ripple effects are being felt across the world. One potential beneficiary of these US-China tensions could be investment funds covering Asia but excluding China.

As the graphic from the Financial Times shows, demand for stocks and bonds in emerging Asia but excluding China has soared in recent months. As of April, just under US$10 billion of foreign purchases had been recorded in such stocks, and just a month later, the figure doubled to exceed US$20 billion.

According to the Financial Times, fund managers see the shift as a way for investors to reap the benefits of emerging Asian economies and to stay exposed to markets with strong ties to the US.

Some also compare it to the emergence of “Asia Ex-Japan” portfolios that grew in popularity in the early 1990s.

More than just trade tensions with the US, China’s slow economic recovery could also be a factor encouraging investors to turn away from the world’s second-largest economy.