The USD Continues to Decline
Over the past 15 years, we have become accustomed to the USD appreciating. However, in 2025 it lost 12% of its value, only a small part of its previous appreciation. Since the beginning of March, the depreciation of the USD has accelerated due to Trump’s erratic trade policy leading to Asian pension funds repatriating some of their investments. While I don’t believe the withdrawal of capital will be a permanent burden, I am certain there will be much less fresh capital flowing into the US market in the coming years than in the last 15 years. This will put pressure on US interest rates, which will rise, and prevent the overvalued US equity market from rising any further.
There are Opportunities in the Rest of the World
From a valuation point of view, those who have avoided the US stock markets in recent years have done well, but they have foregone a great deal of performance. This is because ever higher amounts have been invested worldwide in US companies, which appear to excel in all respects.
It is both exaggerated and unsustainable that almost 74% of global equity capital is invested in the USA.
Compared to the US, the rest of the world is comparatively cheap and offers better opportunities for the reallocation of global economic resources.
Tiger Economies Will Turn More Towards Each Other
Over the last 18 months, I have shared this line of thinking in previous issues and believe there is clear evidence to support it. Intra-Asian trade is increasing, as is the level of technology in these countries.
Consequently, the tiger economies are achieving a greater degree of self-sufficiency, bringing them closer to industrialised nations. Their expansive population dynamics and access to essential raw materials will also strengthen these countries and their currencies in the long term.
China’s Global Footprint Extends Beyond Its Borders
There is a sizeable Chinese minority in Malaysia that exerts significant influence over the state’s economy and is not averse to trading with China. As the dispute with the USA intensifies, trade relations with China’s immediate neighbours will become increasingly important, which, in my opinion, will limit China’s expansionary power in the South China Sea. The fact that China is culturally familiar to numerous Chinese minorities living abroad also facilitates trade relations.
When it comes to trade volumes in Asia, China is already more important than the USA or Europe. This has been a dynamic development over the last six years, and I see no reason why it should end any time soon. It will continue to strengthen China’s cooperation with other Asian countries, as well as those in Africa and Latin America.
The West in Cyclical Decline
The West no longer has much to offer the rest of the world. Technologically, its lead is shrinking, and morally, its noble promises are not being upheld when it comes to tough interest enforcement. In the long term, the West’s economic share will continue to shrink (mid-thirties and beyond). This is almost certain today. This will also change capital flows, with less capital flowing into the USA or Europe. This development has already begun and will initially impact the USD, followed by the euro.
