- A European private wealth manager in Hong Kong told me last week he recently got the catalyst he needed to land a Taiwanese billionaire's account: geopolitics.
Over the past few days in Hong Kong and Singapore, conversations with more than a dozen senior bankers, officials and investors show the same de-risking is happening on the other end of the world with equal urgency. People are asking what’s their 'America plus 1.' It is also clear from these conversations, however, that any such decoupling is unlikely to be complete and will take years, if not decades, given the dollar’s dominant position. One top banker in the region said companies and investors in Asia still want access to the United States as the deepest, most liquid market in the world.
The conundrum can be seen in data. The U.S. dollar still accounts for nearly 60% of forex reserves, but there has been a gradual diversification of away from it, according to the International Monetary Fund. The central banks of China, Hong Kong, Thailand and the United Arab Emirates, for example, are developing a cross-border settlement system that would allow participating banks to settle transactions in local currency.A search for alternatives to the United States is also happening among some companies. Chinese companies, for example, were looking to places like the Mideast for funding, one China-focused investment banker at a global lender said. He pointed to electric vehicle maker Nio's $2.
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