Hidden Forces The Case for a Historic Reallocation to Emerging Markets | Sony Kapoor
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Feb 23, 2026 
Sony Kapoor, economist and sovereign wealth advisor, argues for a historic rebalancing of capital into emerging markets. He discusses why global portfolios became overexposed to US assets and how recent politics forced reassessment. He explores India's optimism, policy lessons from China, manufacturing challenges, shifting geopolitics, and whether AI and demographics will reshape investment opportunities in developing economies.
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US Overconcentration Is Unsustainable
- Global capital's heavy tilt to the US became unsustainable as returns concentrated and policy risks rose under Trump.
- Sony Kapoor argues reallocating marginal dollars away from US assets toward diversification is already occurring.
Rebalance Portfolios Gradually Away From US
- Stop allocating new money disproportionately into the US and reduce marginal exposure to US assets.
- Kapoor recommends gradually trimming allocations (e.g., 20% to 18–17%) to diversify risk.
Dollar And Concentration Flip From Tailwind
- Dollar strength and concentrated US equity returns amplified foreign investors' exposure and risks.
- Kapoor notes falling dollar, rising Treasury risk premia, and top-stock concentration are flipping tailwinds to headwinds.