U. S. investors are withdrawing money from their stock market at the fastest rate in over 16 years, with $75 billion pulled out in the last six months. Of this, $52 billion has exited since the beginning of 2026, marking the largest outflow in the first two months of the year since at least 2010. This trend occurs despite a declining dollar, which typically makes foreign assets pricier for U. S. investors. It suggests that some U. S. investors are following international trends of diversifying away from U. S. assets.
Since the end of the global financial crisis in 2009, investing in U. S. stocks has been profitable due to a strong economy and significant growth in the tech sector. An AI boom led to record highs in the S&P 500 index last year. However, concerns about the risks and costs associated with AI have diminished the appeal of Wall Street stocks. Investors are increasingly noticing better opportunities in overseas markets, as indicated by a Bank of America survey showing a shift from U. S. to emerging market equities at the fastest pace in five years.
Investment flows have also highlighted growing interest in foreign markets. U. S. investors have already put $26 billion into emerging-market equities this year, with South Korea attracting the most at $2.8 billion, followed by Brazil with $1.2 billion. A notable factor in these trends is the 10% decline of the dollar against other currencies since January, which while disadvantageous for U. S. investors, can lead to higher dollar-denominated dividends from better-performing international markets.
Over the last year, the S&P 500 has increased by about 14%, while markets like Tokyo’s Nikkei, the European STOXX 600, Shanghai’s CSI 300, and Seoul’s KOSPI have posted much larger gains. Investors are reassessing high valuations in AI stocks like Nvidia, Meta, and Microsoft and starting to seek more value in traditional industrial and defensive stocks, particularly in global equity markets such as Germany, the UK, Switzerland, and Japan.
The shift away from growth stocks to value stocks is increasingly global, as U. S. investors begin to consider market valuations worldwide. Laura Cooper from Nuveen pointed out a cyclical growth upswing in Europe and Japan and noted the significant performance of European banking stocks. The S&P 500 sits at about 21.8 times expected earnings, while European stocks trade at around 15 times, and Japan and China at 17 and 13.5 times, respectively.
Kevin Thozet from Carmignac indicated that U. S. capital flow into Europe has accelerated since mid-2025, highlighting a distinctive shift from previous trends where U. S. investors saw net outflows during Trump’s first term. Thozet described this as a potential for a great global rotation in investment strategies.
With information from Reuters
