Foreign investors are dumping U.S. stocks at near-record pace

Trump’s trade policy may be backfiring. Instead of making America the top destination for investment, it’s pushing foreign capital away.

According to Bank of America, net outflows from U.S. equities recently hit their second-highest level on record — just shy of the $7.5 billion pulled during the brief banking crisis in early 2023.

The exodus comes as global investors react to the growing uncertainty triggered by President Trump’s aggressive tariff threats.

Between Trump’s inauguration and the market’s low on April 4, U.S. stocks shed a staggering $9.6 trillion in value, according to FactSet. Over half of those losses occurred in just two trading days.

Foreign investors still hold about 20% of the total stock market, or $18.5 trillion, according to Apollo Asset Management. But that’s a double-edged sword.

While it underscores how tied global investors remain to Wall Street, it also leaves plenty of room for further selling if confidence in Trump continues to erode.

As Investors Observer reported on April 18, some analysts see the U.S. dollar’s sustained weakness as further evidence of global de-dollarization.

“Markets are reassessing the structural attractiveness of the dollar,” said George Saravelos, a strategist at Deutsche Bank.

A pivot to Europe

Even as global markets digest Trump’s tariff escalation, investors appear to be rotating into European stocks.

Bank of America, in fact, recently recorded the largest increase in allocations to Europe since 2021.

Ross Mayfield, investment strategist at Baird, said Trump’s “isolationist” agenda may have kicked off “a new regime for investing internationally,” with Europe and Asia as the main beneficiaries.

Invesco strategist Kristina Hooper pointed to Europe-specific catalysts — notably Germany’s 500 billion euro infrastructure stimulus plan — as drivers behind the growing investor interest.

“While this is being done in reaction to U.S. policies, it offers compelling economic benefits for Germany,” Hooper said.

Experts at Natixis called the plan a “significant departure from its traditionally conservative fiscal stance.” With front-loaded investment and higher military spending, Natixis expects Germany’s GDP to accelerate in 2026.

Germany’s DAX is up 6.5% year-to-date, which is in contrast to U.S. markets, which remain in the red.