More Asia investors turning to Europe for diversification in multi-polar world, says DWS
[SINGAPORE] Asian investors with significant capital already allocated to the US are increasingly looking to diversify into Europe, as a more fragmented geopolitical landscape reshapes global investment flows.
The observation comes from Dirk Goergen, global head of the client coverage division of European asset manager DWS.
Speaking to The Business Times in an exclusive interview on Thursday (Jul 2), he said these investors “want to see what role Europe is going to play in this multipolar world”.
They are also reassessing their concentrated exposure to US markets and seeking investment themes beyond the first artificial intelligence wave, he added.
A 2025 survey by BNP Asset Management found that three-quarters of 300 polled investors in Australia, Japan, Hong Kong and Singapore plan to increase their allocation to Europe in the next 12 months.
Many Asian investors view Europe as a “deeply industrialised” region with established strengths in energy, manufacturing and infrastructure that could also benefit from the adoption of AI, Goergen said.
They are now looking beyond direct AI investments, he added. “People are looking at what is the second wave of this AI hype. It is not just a tech theme; it is becoming a broader theme.”
He also pointed to close investment ties between Europe and Asia. Germany and Japan, for example, are similar in that both are known as “the land of engineers”.
This helps Asian investors better understand Europe’s role in industrialisation, AI and energy, he said.
Investing in Europe
DWS sees Europe entering a new phase of investment despite a series of challenges in recent years, including heightened export competition, supply chain disruptions, the energy crisis in 2022 following Russia’s invasion of Ukraine, and reduced US security commitments.
Indeed, some investors remain cautious on Europe, citing slower economic growth, political fragmentation, and uncertainty over trade and fiscal policy.
But DWS still sees more opportunities there, especially with the EU stepping up efforts to boost its global competitiveness and reduce its reliance on the US and China, as its member states promote a competitiveness agenda that places capital markets integration at its core.
DWS said sectors well on the way to transformation include defence, energy, clean technology, digital and advanced technology, space and transport.
In the energy space, momentum is building in renewables. The share of electricity production from renewables is at 48 per cent now, up from 30 per cent in 2015, DWS noted.
Goergen singled out Germany as a particular area of interest for Asian investors, following Berlin’s 500 billion euro (US$572.3 billion) economic pivot in 2025.
“Germany has been very muted over the last years, also from a reform agenda perspective,” he said. “Now it is finally kind of waking up, and taking the lead again.”
Investors becoming more selective
Goergen noted that risk appetite is “accelerating and improving” in the US and Europe, but is not as apparent in Asia.
Among global pension clients focused on fixed income – mainly US dollar bonds and European bonds – US and European investors are moving from investment-grade to high-yield, he said.
In equities, however, more clients are rebalancing away from pure growth to value growth, as they diversify away from thematic pure growth-driven equities. This has driven “substantial inflows” into DWS’ top dividend fund, he said.
Goergen sees strengths in both active and passive strategies to support institutional and retail investors globally.
He noted that demand for active investments have grown, given the recent market volatility, and clients are looking for advice and opportunities.
But demand for multi-asset portfolios has been muted; investors in this arena favour passive strategies, where they seek diversification in specific asset classes, he added.
Singapore as a gateway
Goergen said that Singapore remains a key gateway into Asia, given its strong network of sovereign wealth funds and wealth-management industry.
“The community play is always the key argument. You have the entire finance community (in one place) and that makes it so attractive.”
This was one reason DWS chose Singapore as the final stop for its roadshow.
“We are highlighting the transformational agenda – that Europe is at the moment invested heavily into its future, and from a long-term perspective, that is pretty important to have it also as a diversifier,” he said.
