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If there’s one spot that investors should look to amid all the fiscal risks in most major economies and the de-dollarisation narrative, it’s Asia ex-Japan (AxJ). The US has its own set of issues and so does Europe, and with Japan also facing a power struggle between the government and central bank, there are clear considerations for a shift of money to the other side of the globe.That is what we saw happen in 2025, despite the first half of the year being littered by risks of Trump’s tariffs. And we’re seeing sentiment continue to build towards that again as we get into 2026.The latest Asian currency positioning poll by Reuters here is one that underscores the prevailing narrative and once again, Asian currencies are the ones that might actually benefit the most this year amid all the havoc around the globe. That despite the typical correlation that geopolitical tensions and flight to safety positioning can be bad for emerging market currencies.For some context, this poll is one that focuses on what fund managers believe are current market positions in the nine Asian currencies listed:Some interesting findings:Long Chinese yuan bets continue to nudge higher to the largest in 15 yearsTraders pull back on bets against the South Korean won after months of bashingLong bets on the Singaporean dollar rise to the highest since July last yearLong Thai baht bets climb to the highest since June last yearBullish bets on the Malaysian ringgit (strongest performing Asian currency in 2025) continue to hold
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
Investors should keep a close eye on Asia ex-Japan as a potential safe haven amid global fiscal instability. With the US and Europe grappling with their own economic challenges, including inflation and geopolitical tensions, AxJ markets could offer more resilience. Countries in this region are often less exposed to the dollar’s fluctuations, which is crucial as the de-dollarisation narrative gains traction. This could lead to increased capital flows into Asian equities and currencies, particularly if they maintain stable growth metrics. Traders should monitor key indicators like GDP growth rates and central bank policies in these countries, as they could signal shifts in investment sentiment. Additionally, watch for technical levels in major Asian indices; a breakout above recent highs could trigger further bullish momentum, attracting both retail and institutional investors looking for alternatives to Western markets. However, it’s worth noting that while AxJ may seem appealing, risks remain, especially if global economic conditions worsen. Traders should remain cautious and consider hedging strategies to mitigate potential volatility.
📮 Takeaway
Watch for key economic indicators in Asia ex-Japan; a breakout in major indices could signal a shift in capital flows away from Western markets.
