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Global capital may stick with the US despite emerging market growth: William LeeAs crude stays above $100 per barrel and disruptions in the Strait of Hormuz persist, William Lee, Chief Economist and Managing Director at Global Economic Advisors, says India and Asia are likely to face prolonged energy pressure. Despite global uncertainty, he believes capital will continue to favour the United States for stronger returns.By Reema Tendulkar   |  Prashant Nair   |  Mangalam Maloo  April 23, 2026, 10:30:43 AM IST (Published)4 Min ReadGlobal capital is likely to continue favouring the United States despite growth opportunities in emerging markets, says William Lee, Chief Economist and Managing Director at Global Economic Advisors. “Capital will always flow to where it's most productive, and so far, it's been in the advanced economies,” he said, adding that investors continue to prefer markets where returns are more predictable and risks are lower.

While US markets are powering ahead on artificial intelligence (AI) driven optimism, Lee cautions that the long-term risks from AI-led labour displacement and rising social tensions are being overlooked.

The ongoing geopolitical tensions and supply disruptions around the Strait of Hormuz will continue to weigh on Asia, with India bearing the brunt of elevated energy costs and shortages in critical inputs, he said.

Watch the full conversation here or scroll for edited excerpts.These are edited excerpts from the interview.Q: US markets may have moved on, but the war continues to simmer, and crude prices are feeling the heat at $103 per barrel, hurting markets like India. What’s your assessment?

A: A lot of people were hopeful that perhaps, if not by March-end, then by April, we would see an end to the war. But the resolution is still not in sight.

The real question for Asia and India, in particular, is: when will traffic resume in the Strait of Hormuz, or when will alternative supplies start to come online? That will take time.

Unfortunately, the price pressures you’re seeing right now—the shortages of propane and gas—are things India, and Asia in general, will have to live with because the Strait is such a critical supply line.

The US markets, as you said, have moved on and are focusing more on earnings than the conflict itself, because the United States is relatively energy independent of the Strait of Hormuz.

However, it is not independent of everything that moves through it—fertiliser costs, and helium, which is critical for advanced semiconductor production. These will affect the US, but not immediately.

The distribution of pain is such that India is bearing the brunt of it.

Q: There are second and third-order implications—TSMC, for instance, cutting back on advanced equipment purchases. In the US, though, AI continues to propel markets.

A: There is absolutely that. What’s not talked about enough is how AI will interact with labour. If it enhances skills, improves productivity, and raises wages, that’s fantastic.

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But I fear that it will substitute labour—replacing workers, enriching owners of capital, and boosting profits, which is what markets are focused on.

That, however, could lead to social unrest and tension, which will show up in the polls sooner rather than later.

Markets are very optimistic about future profits, but they are ignoring the social consequences that still need to be worked out.

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As I have said before, it depends on how AI is designed and integrated. If it enhances labour, that’s ideal. But if it replaces labour, we could see the kind of class conflict we studied in our early economics education.

Q: Amid all this, what should investors do in terms of asset allocation—between developed markets, emerging markets, and India, which is impacted by oil and lacks an AI play?

A: Asset allocation ultimately depends on where you believe future profits will come from.

Your objective is to maximise returns, and for me, I’ve always been a developed-market chauvinist. Capital flows to where it is most productive—and so far, that has been the advanced economies.

Despite the appeal of emerging market growth stories, the risks—especially now with energy supply disruptions in Asia—are coming into sharp focus.

This brings us back to where capital is safest and earns the highest return.

I hate to say it, but it’s the United States.

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