‘The Trump factor’: why China may benefit as investors diversify from US dollar assets

As the global financial landscape shifts and policy uncertainty grows in the United States, China is likely to emerge as an increasingly attractive destination for foreign investors seeking to diversify away from dollar-denominated assets, according to a veteran Singaporean investor.US President Donald Trump’s push for a weaker dollar, together with recent volatility in gold, silver and cryptocurrencies, has prompted a reassessment of traditional safe havens, positioning China as a potential winner in this new environment, said Wong Kok Hoi, founder of APS Asset Management, on Tuesday.“I think China will be a beneficiary of the speculative bubble in precious metals and crypto, the dollar’s weakness, and also maybe the Trump factor,” he told reporters at the launch of a new China financial markets research centre co-founded by APS and the China Europe International Business School (CEIBS).His assessment came at a time when Chinese equities are increasingly viewed as attractive, with further upside potential despite risks such as property sector challenges, deflationary pressures and trade tensions.Foreign institutions such as BlackRock China and Fidelity International have recently argued that, over the next three to five years, global portfolios are likely to steadily reduce their reliance on dollar-denominated assets. They expect a gradual shift towards greater diversification, with particular emphasis on China’s market recovery and structural strengths, such as comprehensive supply chains and strong innovation capacity.“Many of those global investors want to diversify away from dollar assets,” Wong said, adding that a growing share of capital is likely to rotate into yuan assets.