Foreign Private Sector Net Purchases of US Stocks Reached $121 Billion in May
Foreign private sector net purchases of US stocks increased by $35.2 billion month-on-month to $121 billion in May, marking the second highest monthly inflow in history.
This is the second consecutive month of growth, with foreign private investors having bought approximately $270 billion in US stocks so far this year, following a record monthly inflow of about $130 billion in November.
Global capital continues to prefer US stocks over other markets, with foreign investors net selling South Korean stocks by $31 billion and $28 billion in May and June respectively, setting records, and also selling $18 billion in Taiwanese stocks in May, marking the second largest monthly sell-off.
Source: Public Information
ABAB AI Insight
Foreign investors previously demonstrated an extreme preference for US stocks with record monthly inflows in November 2024, and this consecutive growth over two months continues to reinforce the dominance of US stocks in global asset allocation since 2022.
Funds are flowing out of emerging markets and Asian tech stocks, shifting towards US stocks, as the private sector mobilizes resources through direct purchases, motivated by the pursuit of US economic growth and structural advantages driven by technology, while avoiding geopolitical and economic uncertainties in other regions.
Similar to the late 2010s when global funds continuously flowed into US stocks driving valuation expansion, this round sees US stocks at the top of global capital allocation expansion, while South Korea and Taiwan face pressures of capital outflow.
This essentially represents capital concentration: global liquidity is aggregating towards top assets in a single market, with the mechanism being the resilience of the US economy and the positive feedback from innovation premiums, continuously amplifying the capital diversion effect from other markets.
ABAB News · Cognitive Laws
Capital always chases certainty in growth rather than diversifying risk.
Record monthly inflows often indicate the continuation of trends rather than peak reversals.
When US assets attract capital, outflows from emerging markets signal a reallocation of capital.