De-dollarisation favours Asian assets despite record US stock run, Societe Generale says

South China Morning Post

04-07-2025

The rotation to emerging markets in Asia that spurred the US dollar's worst performance in more than five decades will probably continue, as a de-dollarisation trend outweighs a record rally in US stocks, according to Societe Generale.
Global investors had turned cautious about their estimated US$62 trillion in dollar-based assets – equivalent to the size of the Nasdaq – as the Trump administration's 'reciprocal tariffs' eroded the status of the world's reserve currency, analysts led by Frank Benzimra at the French bank said in a report on Friday. Also reducing the appeal of the dollar were a potential softening of US growth and the recent retreat in the price of crude oil, which is denominated in the US currency, according to the report.
'We acknowledge that US exceptionalism is diminishing and that de-dollarisation is under way,' said Benzimra, the bank's Hong Kong-based head of Asian equity strategy. 'As the resilience of the [US] economy is expected to wane, the risks to Treasury yields are skewed to the downside.'
Societe Generale's call added to a drumbeat for selling US assets that started when the tariff war sowed global distrust in the dollar and a ballooning US budget deficit triggered currency debasement concerns. The pivot may have a profound impact on the global investment landscape, reversing years of outperformance by US assets.
The US dollar index dropped 11 per cent in the first six months, the worst start to a year since 1973. In Asia, the Taiwan dollar appreciated the most versus the US currency, with a 14 per cent gain. Japan's yen strengthened 8.7 per cent, and South Korea's won advanced 7.8 per cent.
The MSCI Asia-Pacific Index, a broad gauge of stock markets in the region, has risen 12 per cent this year, almost doubling the gain in the S&P 500.