Global Investors Rebalance Portfolios Amid Geopolitical Shifts, With Renewed Focus on China

Amid escalating geopolitical tensions and a rapidly evolving multipolar world order, global investors are increasingly reassessing their portfolio strategies, with renewed interest in China and broader emerging markets. This trend was highlighted at the 2026 Global Investors’ Symposium in Hong Kong, hosted by the Milken Institute.

Industry leaders at the symposium emphasized that while short-term market reactions to the ongoing Middle East conflict remain measured, the medium- to long-term implications—particularly around energy prices, geopolitical fragmentation, and the erosion of the international rules-based order—are driving more strategic asset allocation decisions.

“We’re not too worried for the short term. The bigger question is the medium- and long-term impact on the global economy,” said Kevin Lu, Chairman, Asia at Partners Group. “We pay close attention to where smart money is moving.”

Shift Away from Concentrated Exposure

A key theme emerging from the discussions is a gradual diversification away from heavy US exposure. Investors are increasingly seeking opportunities in non-US markets as global dynamics shift and economic policies become less predictable.

Aaron Costello, Head of Asia at Cambridge Associates, noted a resurgence of investor interest in China, particularly among European investors and, more gradually, American institutions. He highlighted a declining geopolitical risk premium and improving sentiment as potential drivers for renewed capital flows.

“If China can deliver earnings growth and returns, investors will come back,” Costello stated.

China’s Strategic Sectors: AI and Biotech

Within China, artificial intelligence and biotechnology are emerging as focal points for global capital. Hoi Tung, CEO and Chairman of Ping An Overseas Holdings, underscored China’s competitive advantages in both sectors, supported by strong government backing, talent availability, and innovation capabilities.

He cited advancements in AI—described as a “DeepSeek moment”—as evidence of China’s ability to compete globally, alongside leadership in drug discovery and preclinical biotech research.

“These sectors benefit from structural advantages and long-term policy support, making them highly attractive for investors,” Tung said.

Broader Emerging Market Opportunities

Beyond China, investors are also exploring opportunities across emerging markets, particularly in Southeast Asia. Structural shifts such as onshoring and friend-shoring of supply chains are reshaping investment patterns.

Christopher Ganis, Chief Investment Officer of Indonesia Investment Authority, highlighted how proximity to customers and raw materials is becoming a more critical factor than cost optimization alone.

“We are operating in a different world—one where proximity to markets and resources is increasingly important,” Ganis said. “This shift creates significant opportunities for economies like Indonesia, especially when viewed within the broader ASEAN regional bloc.”

A Multipolar Investment Landscape

As the global economy continues to transition toward a more multipolar structure, investors are adopting diversified, resilient strategies to navigate uncertainty and capture growth. China’s evolving role, alongside rising regional blocs such as ASEAN, is expected to play a central part in shaping the next phase of global capital allocation.

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