Core Viewpoint - A strategic global capital rebalancing is underway, with capital flowing from dollar assets to non-dollar assets, significantly impacting markets like China [1][2]. Group 1: Global Capital Diversification - Global investors are reassessing their stock exposure due to trade dynamics, fiscal policy uncertainties, and currency pressures, leading to a diversification of revenue sources into Europe, Japan, China, and other Asian markets [2][3]. - The past 25 years saw a heavy bias towards U.S. assets, but the current depreciation of the dollar and capital outflows are expected to significantly alter the weight of U.S. assets in global indices [3][4]. - Investors are increasingly interested in European and Asian high-rated sovereign bonds, as well as local currency debt markets, indicating a shift in fixed income preferences [7]. Group 2: Emerging Markets and China - The decline of the "American exceptionalism" narrative and the growing demand for diversified investments are enhancing global investors' exposure to Chinese assets and renminbi-denominated assets [9]. - China's bond market, valued at 180 trillion yuan, is seen as an ideal choice for large institutional investors seeking low-volatility assets, particularly government bonds [10]. - The 10-year Chinese government bond is projected to yield over 7% without hedging, outperforming most other countries' bonds, making it an attractive option for investors [11]. Group 3: Investment Opportunities in Asia - Asian local currency and bonds are favored due to low inflation pressures, with Asian dollar investment-grade bonds providing strong defensive characteristics and attractive risk-adjusted returns [8]. - Emerging markets, particularly those represented by China, are becoming increasingly attractive as the dollar depreciates, benefiting local bonds and equities [5][6].