THE dollar’s drop has prompted British investors to bale out of US assets at their fastest rate since the 1998 Asian crisis.
The exodus has left analysts questioning whether investors’ love affair with US assets is over.
Latest data from the US Treasury showed overall UK buying of US assets plunged from $15.2 billion (8.8 billion) in August to $300 million in September – the lowest since October 1998. There was net selling of equities for the fifth month this year and the second- biggest sale of Treasuries – US Government bonds – on record.
Only strong buying of corporate bonds prevented the headline figure from diving into the red – something not seen since the near- collapse of hedge fund Long-Term Capital Management in October 1998.
Jeremy Batstone, director of investment strategy at The Fyshe Group, said US assets had fallen out of favour amid concerns about America’s current account deficit and suspicions that Washington has abandoned its strong dollar policy, “We could conceivably be at the watershed of an important change in asset allocation,” Batstone said. “With the US trade deficit running at 5% of gross domestic product, the dollar is only going to go one way – down.”
Investors were instead turning east, to Japan and China in particular.
There are rumours that George Soros and Warren Buffett, the world’s most famous speculators, are betting the dollar will plummet.
