The End of U.S. Dominance? India Emerges as the World’s Next Big Bet

For over a decade, US markets held a special place in the eyes of global investors. They were seen as the ideal mix of growth, innovation, and safety. The idea of “US exceptionalism” dominated investment thinking, and American assets were often the centrepiece of global portfolios.

However, now that narrative is starting to lose its grip. As cracks form in the US economic foundation, investors are beginning to look elsewhere—and India is increasingly catching their attention.

Signs of Strain in the US Economy

According to the HSBC Asset Management report, the US economy is under pressure. Growth forecasts for 2025 have been cut to just 1.8%, reflecting growing concerns about the country’s economic momentum. At the end of 2024, the US reached an all-time high share in global equity indices, often a warning sign of an overheated market.

Meanwhile, traditional market relationships are breaking down. Stocks, bonds, and the dollar have all sold off at the same time, creating a picture more familiar in emerging markets than in a supposed safe haven like the US.

Perhaps most notably, US Treasuries are no longer acting as the ultimate safe asset. Investors have long counted on them to provide a hedge during turbulent times, but that trust is now being tested. Even with higher US Treasury yields and global uncertainty, the US dollar has weakened, which defies normal patterns and suggests that capital is flowing out of the country. All of this is forcing investors to rethink what it means to be “safe” in today’s world.

Also Read: Trump’s Tariffs Hit China, But Boosted Vietnam: Where Was India?

The Rise of Global Alternatives

At the same time, other regions are stepping into the spotlight. Europe and Asia have been outperforming since shortly after the US election.

These markets are benefiting from low valuations, supportive local policies, and relatively stable geopolitics. It’s not just a short-term shift—it looks more like a structural rotation.

Investors are starting to question whether the US should still be the automatic centrepiece of a global portfolio.

India’s Standout Strength and Resilience

Amid this changing landscape, India has emerged as a standout. Indian equities have shown strength even as global markets stumble, gaining ground despite the rise in trade tensions. One reason is India’s limited exposure to US exports—goods exports to the US make up just 2% of its GDP.

That helps shield it from direct tariff risks. More importantly, India’s growth is driven by domestic consumption and services rather than exports, making its economy more resilient to global shocks.

The Indian government’s push for infrastructure investment, along with easing by the Reserve Bank of India and strong job creation, has created a supportive environment for growth. Reform momentum is also picking up. The global shift could push India to improve its trade policies, enhance its business climate, and attract more long-term strategic investment.

And after a recent correction, Indian equities are trading at more attractive valuations, especially considering the country’s world-leading economic and corporate earnings growth.

A New Definition of Safety and Strategy

All of these points point to a broader change in how investors think about safety and diversification. Traditional safe havens like gold, the Swiss franc, and the yen still have a role to play. But increasingly, investors are also looking at less conventional assets, such as infrastructure and emerging markets like India.

In today’s uncertain environment, US assets may need to offer higher returns to justify their risk, while India offers a compelling alternative—one built on stable politics, domestic growth, and reduced dependence on the West.

From a strategic perspective, HSBC expects the US to experience below-trend growth with inflation remaining above target, while economies like India are set to grow steadily with manageable inflation.

In this context, India is not just a short-term opportunity—it could be a new long-term core. For global investors who have long relied on the US, the key question is no longer just how to hedge their risks. It’s about where to build for the future. And increasingly, that answer is shifting from the West to the East.