Asia, Europe, gold, private markets: Where investors can seek refuge as US exceptionalism is cast into doubt

[SINGAPORE] The turmoil and volatility in global financial markets, where trillions of dollars were wiped off US equities since “Liberation Day”, are leading investors to lean towards the idea that American exceptionalism may be nearing its end.

Earlier, the shock that Chinese startup DeepSeek delivered in January led the likes of JPMorgan Chase to issue a research report titled Is US Exceptionalism Here to Stay? on Feb 28.

JPMorgan’s stance has taken a downbeat turn, with its chief executive officer Jamie Dimon warning that President Donald Trump’s tariffs could push the American economy into recession.

Swiss private bank Julius Baer told clients to take the opportunity to move out of American equities should prices rise.

“We recommend using any short-term strength in US equities over the next few weeks to sell and further diversify into non-US equities, such as Europe,” said Philipp Lienhardt, head of equity research at Julius Baer, in an Apr 10 note.

Cautious and diversified, with an eye on Asia

Investment experts have maintained that staying cautious and diversified is still the best way to hedge one’s bets in the current uncertainty-fuelled climate.

Despite the hit Asia is likely to take from the tariffs, Bill Maldonado, CEO of Eastspring Investments – which has US$258 billion in assets under management (AUM) – told The Business Times that the region is still the place to be.

“Tariffs are bad for the world, but they’re really bad for the United States. It’s the United States economy that will suffer the most now, if it really is the end of US exceptionalism, and that’s going to stop sucking in capital from around the world, where do you want to be?”

CEOs of asset managers in Europe or the US would find Asia to be the region to generate marginal investment and revenue, he noted.

“In Asia, that’s where the middle class continues to rise inexorably. That’s where the majority of the world’s wealth is being generated, is going to be generated going forward.”

Eastspring’s advice to investors is to stay cautious and take the trade situation as the new normal, as this would make it easier to pivot should that assumption prove wrong.

What about China?

With the damage to American credibility and exceptionalism, Natixis Investment Managers said that investors could hold a more balanced view between the US and Europe. Nonetheless, Jack Janasiewicz, portfolio manager at the company, which has US$1.4 trillion in AUM, noted that the US consumer is still the world’s largest growth driver. Given these considerations, while Natixis “still prefer(s) to tilt towards US investment relative to Europe and Japan, that gap might close a bit given the recent development on both sides of the Atlantic”.

As for Asia, Natixis prefers to keep investing in the region, noting that the situation remains fluid as it is unclear whether the tariffs are permanent.

Zooming into China, Natixis would “look to keep exposure to a minimum in the near term”, added Janasiewicz.

Standard Chartered, however, upgraded China equities to “overweight” in a Mar 28 report, favouring high-dividend-paying state-owned enterprises, particularly those that are not in the financial sector and hence less exposed to the troubled property sector.

The bank downgraded its call on US equities to “neutral”, and raised its recommendation on European stocks excluding UK to “neutral” as well.

“There is certainly uncertainty around recession (in the US),” Samir Subberwal, global head of wealth solutions, mortgages and deposits and chief client officer at StanChart, told BT recently. “What we’re saying again is… at this period, be conservative with the portfolios.”

In the last few years, StanChart had consciously moved client portfolios to multi-asset solutions, which will provide slightly better cushioning against the current volatility, he added.

Bonds, gold

Turning to asset classes, StanChart is reiterating its recommendations on investment-grade bonds and selective high-yield bonds, and gold.

This is even as US Treasuries have been hit by fresh selling as investors rushed to accumulate cash, pushing bond yields up by the most on a weekly basis since 2013. Yields and prices move in opposite directions.

Tan Min Lan, head of the chief investment office, Asia-Pacific, at UBS Global Wealth Management, said the rally in bond yields “should offer respectable total return potential”. Even in a downside scenario, 10-year Treasury yields could fall to 2.5 per cent, “offering potentially significant capital gains for investors”.

UBS also favours gold, which soared past US$3,200 an ounce to an all-time high on Apr 11, buoyed by recession concerns.

“We believe gold prices will remain well-supported by the uncertain trade and geopolitical backdrop as well as the potential for swifter rate cuts from the Fed, which lowers the opportunity cost of holding non-yielding assets,” noted Tan, referring to the US Federal Reserve.

Investors who can access private markets should keep holding such assets as well, said StanChart’s Subberwal.

“We continue to advise professional and accredited investors to have private-market products in their portfolios as well, which is private credit, private equity and private infrastructure. So a combination of private-market products in the portfolios always provides stability.”