
Asian investors trim US assets amid weak dollar, but full pullback ‘difficult'
The proportion of US assets in Asia's securities portfolios fell by 0.7 percentage points, to 40.8 per cent in the first quarter from a peak of 41.5 per cent in the fourth quarter of 2024, the highest level since late 2017, the report said.
The pullback was pronounced in China, where the share of US assets in portfolio investments declined by about 16 percentage points to 28 per cent in March this year from December 2017.
However, the report said reducing Asia's overall stockpile of US assets was not easy given the current account surpluses of the region's economies, which were at a record high of US$1.1 trillion in the first quarter.
Economies with surplus capital often invest in US financial markets, which are the world's largest and most liquid, according to the Cato Institute, a US-based think tank.
'Asia's gross international investment position [in US stocks] will continue to grow,' Morgan Stanley analysts wrote. 'The lack of large and liquid alternatives means that it would be difficult for Asia to reduce its holdings of US assets.'
While China's holdings of US assets dropped to US$1.3 trillion this year from their 2013 peak of US$1.8 trillion, the rest of Asia continued to increase its exposure to US assets to a new high of US$7.2 trillion in the first quarter.
The weakening of the US dollar was one reason Asian investors were reconsidering their allocations to US assets. Analysts remain bearish on the greenback, expecting further weakening amid high US fiscal deficits, a widening current account gap, and the drag from tariffs on the US economic outlook.
The US dollar index, a benchmark gauging the value of the dollar against a basket of six foreign currencies, dropped to 98 on Tuesday, down nearly 6 per cent over the past 12 months, according to Trading Economics, an online financial data provider.
In April, the Trump administration imposed a minimum 10 per cent tariff on imports from many countries. China was among those most affected, with Beijing's retaliatory tariffs reaching as high as 125 per cent before both sides agreed to ease tensions.
In May, Beijing and Washington reached an agreement to implement a 90-day pause on tariffs on each other's goods, which was expected to end in August. Both countries' leaders were expected to re-enter tariff negotiations next month. - South China Morning Post

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The Star
42 minutes ago
- The Star
Spy cockroaches and AI robots: Germany plots the future of warfare
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Marc Wietfeld, CEO and founder of autonomous robots maker ARX Robotics, said a recent meeting with German defence minister Boris Pistorius hammered home how deep the rethink in Berlin goes. "He told me: 'Money is no longer an excuse – it's there now'. That was a turning point," he said. Germany in the lead Since Donald Trump's return to the political stage and his renewed questioning of America's commitment to NATO, Germany has committed to meet the alliance's new target of 3.5% of GDP on defense spending by 2029 – faster than most European allies. Officials in Berlin have emphasised the need to foster a European defence industry rather than rely on US companies. But the hurdles towards scaling up industry champions in Germany – and Europe more broadly – are considerable. Unlike in the United States, the market is fragmented in Europe. Each country has its own set of procurement standards to fulfill contracts. The United States, the world's top military spender, already has an established stable of defence giants, like Lockheed Martin and RTX, and an advantage in key areas, including satellite technology, fighter jets and precise-guided munitions. Washington also began boosting defence tech startups in 2015 – including Shield AI, drone maker Anduril and software company Palantir – by awarding them parts of military contracts. European startups until recently languished with little government support. But an analysis by Aviation Week in May showed Europe's 19 top defence spenders – including Turkey and Ukraine – were projected to spend US$180.1bil (RM 759.57bil) this year on military procurement compared, to US$175.6bil (RM 740.59bil) for the United States. Washington's overall military spending will remain higher. Hans Christoph Atzpodien, head of Germany's security and defence sector association BDSV, said one challenge was that the military's procurement system was geared toward established suppliers and not well suited to the fast pace that new technologies require. Germany's defence ministry said in a statement it was taking steps to accelerate procurement and to better integrate startups in order to make new technologies quickly available to the Bundeswehr. Annette Lehnigk-Emden, head of the armed forces' powerful procurement agency, highlighted drones and AI as emerging fields that Germany needs to develop. "The changes they're bringing to the battlefield are as revolutionary as the introduction of the machine gun, tank, or airplane," she told Reuters. Spy cockroaches Sven Weizenegger, who heads up the Cyber Innovation hub, the Bundeswehr's innovation accelerator, said the war in Ukraine was also changing social attitudes, removing a stigma towards working in the defence sector. 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The Star
42 minutes ago
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New Straits Times
42 minutes ago
- New Straits Times
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