Capital Asylum

19 Aug

The Economist recently discussed the sudden massive influx of Hong Kong Dollar buying in response to the Russian Crisis. Russian oligarchs, ostensibly in response to the recent sanctions, were fleeing to the safety of what they consider to be a politically friendly environment. This influx caused a great deal of frenzied U.S.Dollar buying in order to retain the HK dollar/US Dollar peg. In addition, it also was reported that the strong bid to high end London real estate appears to have severely diminished, most likely due to a diminished Russian appetite for safe haven buying. What is interesting about these flows of capital is that the search for safe haven assets is now dictated by the “safety” of the political environment, and not necessarily by the perceived riskiness of the asset itself (stocks/bonds). Much like those seeking political asylum for purposes of exercising their basic freedoms, capital seems to be seeking out its own level of freedom. Clearly this kind of thinking bodes well for hard assets, particularly those with a higher degree of liquidity. Hard Assets Are Apolitical. BUY STUFF

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