The world is witnessing a massive paradigm shift in the reallocation of resources by global investors in the face of changing global market dynamics. In the last nine months, there has been an influx of $100 billion in Asian markets, excluding China, in what can be referred to as one of the biggest shifts in investments in recent times because of concerns over U.S. market concentration and geopolitical risks.
Goldman Sachs verifies a big diversification trend in Asia
The revelation about the magnitude of investments that took place in the investment migration was presented by Kevin Sneader, who is the president of Goldman Sachs’ Asia Pacific operations excluding Japan, at the Milken Institute Asia Summit 2025, which was hosted in Singapore. The major beneficiary of the investment migration has been Japan, which has managed to garner considerable institutional investments from hedge funds and asset managers across the globe who seek to tap into the growth story in Asia.
“There is incremental flow in this region, and I think it is very important to understand it in the context of the diversification movement rather than an exit story,” Sneader further explained at the summit. “Technology, consumer discretionary, and industrial are very popular in the market in Asia, and healthcare has picked up well in the private market space.”
Fast money fuels initial investment surge
The major sources of capital coming to Asia are hedge funds and “fast money” investors who are currently at around 60-65% of their average investments in Asia. While it shows there is room to grow, it is very volatile because market shifts can cause it to go from “fast” to “gone” very rapidly.
Temasek registers record growth in portfolio in the wake of global shifts
Singapore state investment firm Temasek International has announced an 11.6% increase in net portfolio value to a record high of S434billion (340 billion) as of March 31st. Its CEO, Dilhan Pillay, has declared that “globalisation, in the manner in which we knew it, is no more” because of the forces of protectionism and energy constraints affecting global investment returns.
The transformation of supply chain networks to place a higher priority on resilience rather than efficiency has brought new costs to the table, which must be considered in investment calculations.
“The reconfiguration of supply chains to serve resilience over efficiency, there is a price for resilience,” Pillay said. “It is a bit of an insurance policy. So that doesn’t abate over time unless there is a substitution for what you are trying to shield yourself from.”
China has mixed market sentiment despite equity market rallies
Despite the massive influx in AsiaExChina, the recent equity market surge in China has been driven largely by locals and technology stocks. The foreign institutional investors remain wary about investing in China, with mutual funds and institutional investors yet to commit to pre-pandemic investment numbers despite hedge funds’ renewed interest in the market.
Investment flow breakdown:
- Japan: Main beneficiary of the diversification trend
- Technology: The most interesting sector in the region
- Healthcare: Increased acceptance in the private market
- Industrial sector: Gaining persistent institutional investments
Sneader warned against being overly optimistic about the situation in China, pointing out that “foreign investors are operating in the 60th, 65th percentile of their average investments.” The mutual funds and institutional investments “still not flowing back into China,” even though hedge funds “took a hard look at Asia” as an investment destination.
This capital reallocation reflects broader concerns about U.S. market concentration, geopolitical tensions, and the search for growth opportunities in regions with different economic cycles. As supply chains prioritize resilience over efficiency and artificial intelligence reshapes entire industries, Asia’s diverse economies offer investors exposure to these transformative trends while providing geographic diversification from traditional Western markets.
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