Leading emerging markets strategist says the long American century is over: Place your bets on China, not the U.S.

Louis-Vincent Gave, CEO of Gavekal Group, contends that the "American century" has concluded, urging institutional investors to reallocate from U.S. assets to China. He posits that global portfolios are currently overweight the U.S., with significant exposure locked in illiquid assets, which will compel funds to liquidate liquid holdings as they reduce their U.S. footprint.

Analysis

Louis-Vincent Gave, CEO of Gavekal Group, presents a high-conviction bearish thesis on U.S. assets, arguing that a structural rotation is underway as the era of "U.S. exceptionalism" concludes. The core of his argument is a technical, flow-driven dynamic: global pension funds and institutional investors are significantly overweight U.S. holdings after years of outperformance, with a substantial portion concentrated in illiquid private assets such as private debt, equity, and venture capital. Gave posits that as these institutions seek to reduce their U.S. exposure, the illiquidity of their private holdings will force them to liquidate their most liquid assets—namely publicly traded U.S. equities and bonds. This creates a "sell what you can, not what you should" scenario, implying potential indiscriminate selling pressure on U.S. public markets. Furthermore, Gave identifies China as the primary beneficiary of this capital reallocation, suggesting its competitive advantages, particularly in AI, will erode U.S. corporate profitability, encapsulated by his statement, 'When China walks into the room, the profit walks out.'

Key Decisions for Investors

• Investors should critically review their U.S. public market exposure, particularly in highly liquid large-cap names, for vulnerability to technically-driven selling pressure from institutions rebalancing away from illiquid U.S. private assets.
• Consider initiating or increasing strategic allocations to Chinese and emerging market assets, viewing them as potential beneficiaries of the large-scale capital rotation thesis presented by Gave.
• Monitor institutional fund flow data for early indicators of a sustained outflow from U.S. public markets, which would serve as a key validation signal for this bearish macro call.
• Assess the knock-on effects of illiquidity in private market portfolios, as forced selling in public markets could be a signal of deeper stress within venture capital, private equity, and real estate funds.