“Sell America, buy Asia” trade interrupted as oil and war risk reset the outlook

The “sell America, buy Asia” trade has hit turbulence. One of 2026’s cleanest positioning calls is suddenly wobbling, as oil, war risk, and a firmer USD force investors to ask whether Asia’s rally was built for geopolitics after all, Bloomberg reports.

The market reaction has been blunt: The MSCI Asia Pacific Index is down about 6% this week, versus a 0.1% drop for the S&P 500, as funds rotate back toward US assets and the USD regains haven status. Taiwan is flashing a similar strain, as foreigners dumped USD 6.3 bn of equities in just the first three days of the week, putting the market on track for one of its largest weekly outflows on record.

The problem for Asia: Asia imports the shock more directly than most, with Japan and South Korea especially exposed to Hormuz-linked shipments. China, Japan, Korea, and Taiwan are all heavily import-dependent, making this oil spike “exponentially more corrosive” for Asia than for the West, Vantage’s Hebe Chen said. Goldman Sachs estimates a 20% jump in Brent would shave as much as 2% off regional earnings.

The AI trade is now part of the unwind. Investors are trimming last year’s hardware outperformers — especially South Korea and Taiwan — as higher energy costs collide with rich multiples and make capital-heavy tech stories harder to defend.

Credit is flashing the same warning: A Julius Baer note seen by EnterpriseAM says Asian CDS spreads are widening across oil-importing economies, with India up 6.6 bps in a week and higher-risk Southeast Asian names moving 4-6 bps, as markets begin pricing a steeper regional risk premium if the war drags on.

Truth is, some of that fatigue predated the geopolitical jitters. Foreign investors sold Asian equities for a fourth straight month in February, Reuters reports, with South Korea alone posting record outflows of USD 13.7 bn, as AI valuation nerves had already started spilling far beyond Wall Street.

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THE CLOSING BELL-

The EGX30 rose 2.3% at Thursday’s close on turnover of EGP 6.8 bn (7.0% above the 90-day average). Local investors were the sole net buyers. The index is up 13.6% YTD.

In the green: Palm Hills Developments (+6.6%), Qalaa Holdings (+5.9%), and Edita (+5.5%).

In the red: Kima (-3.4%), Raya Holding (-1.7%), and Heliopolis Housing (-1.6%).