The value trade is dead
At least for the man who built an empire on it. Cheah Cheng Hye, the co-founder of Value Partners and a titan of Asian asset management, is liquidated. He is not moving to cash. He is not rotationally shifting into defensive utilities. He is buying gold. This is a structural retreat by one of the most disciplined fundamentalists in the history of the Hong Kong market. When the man often called the Warren Buffett of the East stops looking for undervalued cash flows and starts looking for a vault, the signal is deafening.
The shift is total. Cheah is reportedly moving a massive portion of his personal wealth into physical bullion and gold related instruments. This is not a hedge. It is a conviction. For three decades, his methodology relied on the transparency of corporate earnings and the long-term growth of the Asian middle class. That thesis is now being mothballed. The move reflects a profound distrust in the current valuation of fiat-denominated assets and the reliability of the global financial architecture.
The erosion of the risk premium
Equity markets are currently priced for perfection. Risk premiums have compressed to levels that ignore the escalating volatility in sovereign debt markets. Per recent data from Bloomberg, the spread between high-yield corporate debt and risk-free benchmarks has narrowed, even as default risks climb. Cheah understands that when the margin of safety disappears, the only rational move is to exit the arena entirely. Gold serves as the ultimate exit ramp.
Traditional value investing requires a stable discount rate. It requires a predictable environment where future cash flows can be mapped against current prices. We no longer live in that world. Inflationary volatility has shattered the predictability of the weighted average cost of capital (WACC). If you cannot trust the denominator, the numerator becomes irrelevant. By pivoting to gold, Cheah is opting out of the valuation game altogether. He is betting that the preservation of purchasing power will outperform the pursuit of yield over the next thirty-six months.
The Geopolitical Hedge and the Hong Kong Factor
Hong Kong is the epicenter of this shift. As a bridge between the East and the West, the city feels the friction of decoupling more than any other financial hub. The weaponization of the US dollar has forced a rethink of reserve assets among the ultra-high-net-worth (UHNW) demographic in Asia. According to market reports from Reuters, the demand for physical gold storage in Hong Kong and Singapore has reached a five-year high this week. This is not retail panic; it is institutional repositioning.
Central banks are leading the charge. The People’s Bank of China has been a consistent buyer of gold, diversifying away from US Treasuries to insulate its balance sheet from external shocks. Cheah is simply following the smartest money in the room. He recognizes that in a multipolar world, the only neutral asset is the one that carries no counterparty risk. Gold is nobody’s liability. In an era of sanctions and frozen assets, that quality is worth more than a dividend yield.
Visualizing the Pivot
To understand the scale of this move, we must look at the divergence between gold and traditional Asian equity benchmarks. The following chart illustrates the performance gap that has opened up as of January 18, 2026.
Gold vs MSCI Asia ex-Japan Index Performance (Indexed to 100)
Asset Allocation Shift: 2024 vs 2026 Projections
The following table outlines the estimated shift in personal portfolio allocation for high-conviction value investors like Cheah, based on recent public disclosures and market sentiment.
| Asset Class | 2024 Allocation (%) | January 2026 Allocation (%) | Change (bps) |
|---|---|---|---|
| Public Equities | 65% | 25% | -4000 |
| Physical Gold | 5% | 45% | +4000 |
| Private Equity | 15% | 10% | -500 |
| Cash & Equivalents | 10% | 15% | +500 |
| Real Estate | 5% | 5% | 0 |
The technical mechanism of this shift is often misunderstood. It is not just about buying bars of metal. It involves a complex layering of gold futures, mining royalties, and physically-backed ETFs. For a manager of Cheah’s caliber, the move is likely executed through a combination of London Bullion Market Association (LBMA) spot purchases and strategic stakes in Tier 1 miners. This provides both the liquidity of the metal and the operational leverage of the producers. You can track these institutional flows through the World Gold Council data, which shows a massive migration of capital from Western equity funds into Eastern gold vaults.
Skeptics will argue that gold is a dead asset. They point to its lack of yield. They forget that in a period of negative real interest rates, the zero yield of gold is actually a premium. When inflation is running at 6% and ten-year treasuries are yielding 4%, you are losing 2% of your wealth every year by holding “safe” government debt. Gold does not have this decay. It is a store of value that has survived every currency collapse in human history. Cheah is not looking for growth; he is looking for survival.
The broader implications for the Asian markets are grim. If the region’s premier stock picker is no longer picking stocks, the liquidity drought in the Hang Seng and other regional indices will only deepen. This creates a feedback loop. Lower liquidity leads to higher volatility, which scares away more value investors, who then rotate into gold, further draining the equity pool. We are witnessing the hollowing out of the traditional investment model.
Watch the upcoming PBoC reserve announcement on February 7. If the Chinese central bank reports another month of double-digit gold accumulation, it will confirm that Cheah’s personal pivot is part of a much larger, state-sanctioned exodus from the dollar-based financial system. The value is no longer in the company; it is in the currency that survives the transition.
