The global trade tensions initiated by the US have adversely affected its economy and may result in a challenging domestic business landscape. This scenario creates an urgent opportunity for major global economic players and asset managers to divest from US equities and Treasuries in search of better risk-return dynamics, explained CEO Jim Kwok, who also serves as vice-chairman of the Family Office Association of Hong Kong. A more favorable risk-return ratio implies a preferable balance between potential risks and rewards.
In response to these tariff disputes, Topaz has adopted a more cautious and diversified strategy to help clients mitigate risks associated with US and dollar-denominated holdings. The firm’s exposure to the US has been reduced from 52% in the first half of 2023 to approximately 34%, while investments in China, Japan, the broader Asia-Pacific region, as well as in commodities and precious metals, have seen an increase.
Kwok stated, “We continuously gather market insights and adjust our investment positions gradually.” For instance, Topaz sold off some shares in Tesla after observing CEO Elon Musk’s involvement with the Trump administration.
This shift indicated that Musk appeared to be more focused on his political duties rather than steering the company, Kwok noted. Tesla’s stock has dropped by 30% this year.