Asian investors have become just as bullish about the S&P 500 (INDEXSP:.INX) as domestic investors, and they are more concerned with political machinations than underlying business trends, according to Citi analyst Tobias Levkovich, who just finished a trip talking to some of his clients across Asia. While he expected to find people interested in the low number of mergers and acquisitions, the effect of tax engineering and low interest rates on margins, and other fundamental issues, he says that he found investors wanting to talk largely about the Great Rotation and what would happen next in D.C.

Global Investors complacency

Lack of M&A activity

“An excessive focus on Fed action has distracted investors from base business trends,” writes Levkovich. “There were very few questions about the lack of a mergers pickup, in sharp contrast to US investors who have wondered significantly about the lackluster deal environment. In fact, clients were more concerned about when money would flow out of bonds into equities than almost any other issue.”

He found that Asian investors were mostly interested in American equities, much more so than in Europe or emerging markets, and that there big concern was where new money would come from to keep pushing the S&P 500 (INDEXSP:.INX) up. More substantive issues like which sectors might have good value were ignored, and Asian investors were deeply committed to U.S. equities.

Levkovich and Citi team found complacency

“Overall, we found complacency to be the order of the day and that in and of itself is worrisome.”

Levkovich says that part of the value of asking investors abroad what they think of the domestic situation is to get a new perspective, but when the same bullishness that you find here is being echoed around the world, whether you find confirmation or a reason to worry says a lot about your attitude toward the market in general.

Valuations have climbed faster than this year’s growth justifies, and faster than most earning projections would justify as well. Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk has warned that his company’s stock price is higher than it deserves to be, and while other executives haven’t been so candid many people are wondering what the catalyst will be for a downward correction. If growing international interest pushes that day back, it may just mean that stocks fall harder once valuations get in line with earnings.