Investors are increasingly reassessing their financial allocations to the United States, a trend highlighted by Goldman Sachs Group Inc. Vice Chairman Robert Kaplan during a discussion at the University of Texas at Austin’s Energy Symposium. Many financial firms are now turning their gaze toward Europe and Asia, seeking growth opportunities in those markets.
Kaplan noted that while there is still enthusiasm for investments in the US, an emerging concern among some investors is the potential over-allocation of resources to American assets. “What happened since January is people are still excited about the US but they’re saying: ‘I think we’re over allocated to the US,’” he stated, adding that discussions around hedging the dollar against currency fluctuations are becoming more frequent, especially among those who have not engaged in such strategies in recent years.
In August, the dollar experienced a decline after what had been a strong month. This downturn coincided with growing expectations for a slowing US economy and potential interest-rate cuts, despite ongoing inflationary pressures. Although investors still regard the US as a secure place to keep their capital, Kaplan pointed out a certain level of unease regarding the institutional framework within the country.
He emphasized an interesting perspective, suggesting that while it may appear from a domestic viewpoint that globalization is waning, this is not the case. “If you’re sitting in the US, you might fairly conclude the world is deglobalizing,” he remarked, only to assert, “I don’t think it is. It’s not deglobalizing. Globalization is continuing and as I told you, it’s continuing aggressively.” Countries such as India, Canada, and China are recognizing the importance of global partnerships, especially given their current economic challenges characterized by substantial debt and rising costs.
However, Kaplan noted that the US is not as central to these global discussions as it once was. The year has brought notable market volatility in the US, prompting banks and investment firms to predict that investors are likely to seek alternative markets in Europe and Asia, particularly in sectors like infrastructure and defense.
The anticipated shift in investment focus is echoed by industry leaders, with the CEO of CVC Capital Partners Plc, a major player in European private capital, forecasting sustained investor interest in the region. He indicated that limited partners are increasingly looking to diversify their portfolios away from the US. Similarly, Blackstone Inc. CEO Steve Schwarzman revealed plans for significant investment in Europe, committing as much as $500 billion over the next decade, emphasizing the growing allure of European markets.
In an unrelated context, former President Trump recently lambasted Goldman Sachs CEO David Solomon, criticizing the firm for its predictions regarding the effects of sweeping US tariffs, which indicated that US consumers would ultimately bear the financial burden of such policies.
