Global investors are reallocating capital away from the United States toward international markets amid rising geopolitical uncertainty, according to discussions at the Asian Financial Forum 2026.

Global equity funds recorded net outflows of US$43.2 billion last week, the largest on record, including US$16.8 billion from US markets, based on data from BofA Global Research. The shift reflects growing investor caution following Washington’s more aggressive policy stance at the start of 2026.

Julia Leung, Chief Executive Officer of Hong Kong’s Securities and Futures Commission, said investors are reassessing diversification and asset allocation strategies.

“Do we see capital flows moving to this part of the world, and would that continue?” Leung asked during a panel session at the forum.

Hong Kong’s Role in Portfolio Diversification

Benjamin Hung, International President at Standard Chartered and Chairman of Hong Kong’s Financial Services Development Council, said policy volatility has prompted investors to reconsider overweight positions in US assets.

He noted that Hong Kong’s role as an international financial centre positions it to benefit from increased diversification, citing its offshore renminbi market, growth in dim sum bond issuance, yuan-denominated trade, and IPO financing for new economy companies.

“These are areas Hong Kong can focus on,” Hung said.

Middle East Sees Continued Inflows

The Middle East, particularly the United Arab Emirates, has also attracted growing investor interest. H.E. Waleed Saeed Abdul Salam Al Awadhi, CEO of Capital Markets at the UAE, said all asset classes in the country’s capital markets have seen double- and triple-digit growth in recent years.

He emphasized the importance of sustaining momentum through cross-border cooperation, pointing to bilateral agreements such as mutual recognition of funds signed with Hong Kong.

US Remains the Largest Capital Market

Despite the rotation, panellists agreed that the United States remains the world’s largest destination for global capital.

Gokul Laroia, Asia CEO at Morgan Stanley, said global capital invested in the US continues to rise, reaching approximately US$70 trillion, up from just over US$60 trillion at the beginning of last year.

“The pace of growth may slow, but there are limited markets with the scale to absorb that level of capital,” Laroia said, noting that Japan, China, and Europe offer alternatives, though each faces structural constraints.

The discussions highlighted a shift toward broader diversification rather than a withdrawal from US markets, with select international financial centres positioned to capture incremental flows.