KKR says more US capital flows to Asia as dollar weakens

Global investors with heavy U.S. exposure are gradually shifting more capital to Asia as the dollar loses steam and the region’s fundamentals shine, according to the co-chief executive officer of KKR & Co. Although the rebalancing does not amount to a US retreat, global investors are channeling their “incremental dollars” to Asia, where capital raising and data gathering are most important. The region’s institutions remain underweight in alternative investments, and its large household savings provide a major source of capital, he said. “As the dollar weakens and other markets like Asia continue to have these fundamental headwinds in terms of growth, you’re going to see people diversify their portfolios more and more into Asia over time,” Bae said in a Bloomberg Television interview with Haslinda Amin. The New York-based buyout giant is ramping up in Japan, deploying capital at five times the rate of a decade ago, making it KKR’s most active investment destination outside the US. Japan is now its largest Asian market, accounting for 40% of regional assets. With $14 trillion in household wealth, half still in cash, the country offers rich opportunities as savers move into new asset classes, Bae said. Japan’s new prime minister, Sanae Takaichi, shares many of the economic views of former leader Shinzo Abe, who championed the reflationary policy known as “Abenomics.” Takaichi has long supported increased government spending to spur growth and criticized the Bank of Japan for moving to tighten monetary policy. Takaichi won a parliamentary vote on Tuesday to become the first woman to hold the country’s top leadership post. “Our hope and expectation is that this new prime minister will be committed to the same reform path,” Bae said in an interview from Singapore that aired Wednesday. “If that happens, I think the future is very, very bright for Japan.” The asset manager is also doubling down on India, its No. 2 Asian market. KKR is betting on toll roads, renewable energy and digital infrastructure as the country’s demographics, consumption and manufacturing boom fuel demand. India will be one of KKR’s biggest destinations for infrastructure capital going forward, he said. China wary While Asia is a key beneficiary of global diversification, major North American investors remain wary of China amid heightened US tensions and lingering losses from the government’s earlier crackdown on private enterprise. As recently as 2020, China accounted for more than half of Asia-Pacific’s deal value, but its share fell to just 27% in 2024, according to Bain & Co. Investor sentiment toward China won’t really turn around until private equity firms see a clearer path to monetization, Bae said. Given the current geopolitical climate, the “opening of what can be invested for us today is a little bit narrower than it was.” Exit investment will be the main catalyst for China in the near term, although the outlook remains subdued. Most of the activity over the next three to five years will consist of private equity firms doing deals with each other as strategic buyers take longer to return. Still, KKR remains focused on domestic consumption and value-added services, which Bae says are still China’s investment hot spots. “We certainly haven’t pulled back from China in terms of our commitment there,” he said. KKR recently completed a control buyout of Dayao Beverage, China’s largest homegrown soft drink brand, in a deal worth about $2 billion, according to Bae. With assistance from Naman Tandon. ©2025 Bloomberg LP This article was generated from an automated news agency feed with no text modifications.