Foreign investors were net sellers of U.S. stock ETFs last month, signaling a push to diversify away from American assets amid continued market turbulence driven by President Trump’s erratic policies.
Citing Bloomberg and TS Lombard data, The Kobeissi Letter reported that overseas investors withdrew about $5 billion from U.S. stock ETFs in June - the largest monthly outflow in at least three years. This followed $5 billion in net purchases the month before.
Taken together, these swings highlight a sharp divergence among international investors compared to the end of last year.
For example, back in November, foreign buyers snapped up a massive $24 billion in U.S. stock ETFs. The net buying likely reflected growing investor optimism following Donald Trump’s presidential victory.
Following these massive buys, “Global investors are diversifying away from U.S. stocks,” The Kobeissi Letter said.
Foreign investors are diversifying out of US stocks:
undefined The Kobeissi Letter (@KobeissiLetter) July 3, 2025
Investors from overseas withdrew ~$5 billion from US equity ETFs over the last month, the largest outflow in at least 3 years.
This follows ~$5 billion in net purchases during May.
By comparison, foreign investors poured in… pic.twitter.com/pAO2QiO4yQ
This shift comes even as the S&P 500 and Nasdaq Composite have rebounded 26% and 34%, respectively, from their April lows to reach new all-time highs.
A significant portion of the market’s rebound has been driven by a “V-shaped recovery in tech,” said market strategist Charlie Bilello.
“Since the April 8 closing low, the US Tech sector (XLK) is up over 43%, far outpacing every other sector,” said Bilello.
🚨V-shaped recovery in Tech:
undefined Charlie Bilello (@charliebilello) July 6, 2025
Since the April 8 closing low, the US Tech sector ($XLK) is up over 43%, far outpacing every other sector.
The S&P 500 is up 26.5% over the same period, one of the biggest short-term rallies in history.
Video: https://t.co/5ET8uNepwF pic.twitter.com/nDl0F7MozJ
A stock rally “nobody is comfortable with”
The rapid market recovery, combined with aggressive net selling by foreign investors, has made recent market performance difficult to digest for many, according to Bloomberg.
TS Lombard noted that this unease partly stems from ongoing trade-war uncertainty. The Trump administration recently warned a dozen countries that they will soon receive tariff letters unless they negotiate new deals.
Treasury Secretary Scott Bessent reinforced that threat over the weekend, telling CNN that tariffs could “boomerang back” to Liberation Day levels - the same levels that shocked investors and triggered a nearly $5 trillion exodus from U.S. stocks in just days.
So far, the Trump administration has only struck trade deals with three countries: The United Kingdom, China, and Vietnam. However, negotiations with China are still ongoing, with Beijing stressing that the current agreements are part of a “broader” strategy yet to be finalized.
For investors, the real concern is “the potential for permanent damage during and after the trade war purgatory,” TS Lombard analysts Steven Blitz and David Oneglia said.
Although stocks have rebounded since April, strategy funds aren’t rushing to add positions in U.S. markets, according to UBS.
These investors “prefer smoother trends, and will wait for price confirmation before pressing the buy button hard,” UBS added.
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