Asia offers significant opportunities for diversification and warrants a greater allocation in investors’ global portfolios amid shifting geopolitical dynamics, asset management executives and officials told the Global Financial Leaders’ Investment Summit on Wednesday.

“Over the past decade, capital has been rewarded handsomely by a small constellation of markets and companies, most of them American,” said Kelvin Wong Tin-yau, chairman of Hong Kong’s Securities and Futures Commission.

That success sustained over many years, however, has shaped portfolios, benchmarks and expectations, creating a pull towards the familiar, he said. “What might we be overlooking precisely because we are so comfortable? That brings me to Asia.”

Speaking on the event’s third day, Wong said active judgment, disciplined capital allocation and “a willingness to look beyond the familiar” would become more important amid geopolitical fragmentation and rapid technological changes.

The previous narrative of “the Asian growth story” no longer captures the full picture, he said, pointing to the “real question” is not whether to be “bullish on Asia”, but whether global portfolios have fully priced the diversity of its transformation.

“The next great opportunity may not be found where capital is already most comfortable. It may be found where change is the greatest, and understanding has yet to catch up. And increasingly, I believe, extraordinary opportunities are being written now, here in Asia,” Wong added.

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Organized by the Hong Kong Monetary Authority, this year’s three-day summit has attracted some 280 prominent leaders from across the global financial industry. Financiers discussed key macroeconomic trends, market shifts, and technological advances that are shaping opportunities and risks across various sectors, asset classes, and geographies.

At a panel discussion on Asia’s growth engines and investment horizons, Jeffrey Perlman, chief executive officer of Warburg Pincus, pointed out a “real imbalance” in global investment allocations, saying some of his peers had pulled back from Asian markets while reinforcing their focus on North America.

“I think they’re missing a story here,” Perlman said, adding that he expects diversification to pay off over the next decade as more investors reallocate portions of their portfolios away from “hyper-concentration”.  

He also highlighted opportunities in the Chinese mainland market, where relatively low borrowing costs were creating favorable conditions for buyout investors.

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Ben Way, global head of Macquarie Asset Management, which has more than 60 infrastructure portfolio companies in Asia, said the region has long offered significant opportunities, but differences between markets could become a hurdle for many investors.

The panelist stressed the need to tailor investment strategies and focus on different themes based on each market’s conditions, adding that artificial intelligence was creating a vast opportunity set as data centers required energy solutions across the region.

Way also praised Hong Kong’s unique role in connecting Asian economies and the rest of the world, particularly the Middle East, saying Macquarie will lean on the city's advantages.

“I think the way that Hong Kong positions itself, from the capital markets point of view, is both as a source of capital for our funds and a talent pool, but also as a connecting role. I think that's incredibly important."

Hong Kong’s Financial Secretary Paul Chan Mo-po said the city can serve as a bridge that connects businesses at different stages of development with global investors’ capital, given its common law system, free flow of capital and international networks that provide a trusted and familiar environment.

“Hong Kong will continue to widen the choices for financing and allocation, so that businesses can find the right capital at every stage of their development, and investors can participate in the growth of China and Asia across different asset classes and markets,” Chan added.

Contact the writer at gabylin@chinadailyhk.com