Over the Past Year, 1,280 Trillion Won in Foreign Funds Flooded U.S. Stock Markets... 'Record High'

[Financial News] Foreign investors' purchases of U.S. stocks have reached an all-time high.
According to the Financial Times (FT) on the 26th (local time), foreign investors' net purchases of U.S. stocks and investment fund shares totaled $942 billion (approximately 1,280 trillion won) over the 12 months through July this year.
This was the largest amount recorded over a 12-month period since the U.S. Department of the Treasury began compiling related statistics in 1985.
In particular, foreign investors' net purchases of U.S. stocks and investment funds totaled $426 billion (approximately 579 trillion won) in the second quarter, surging 62% from the same period last year.
The previous quarterly record was $299 billion (approximately 406 trillion won), set in 2022.
The record influx of foreign funds coincided with the strength of U.S. stock markets.
The S&P 500 Index rose approximately 20% in the year through July. Although it plunged in the second quarter amid the Iran war, the index later rebounded and gained 14.9%. This was its strongest quarterly gain since the second quarter of 2020.
Analysts say investors from countries such as South Korea and Taiwan, whose stock markets have performed strongly, also contributed to the purchases of U.S. stocks.
As gains in Samsung Electronics and SK hynix increased the share of South Korean stocks in existing investors' portfolios, those investors diversified their funds into overseas markets, including the United States, to reduce the risks of concentrating their investments.
Brad Setser, a senior fellow at the Council on Foreign Relations (CFR), said, "It is rare to see more than $200 billion (approximately 270 trillion won) flow out of South Korea into overseas stocks."
By contrast, foreign investors' demand for U.S. bonds declined.
Foreign investors' net purchases of U.S. bonds fell from $314 billion (approximately 427 trillion won) in the first quarter to $188 billion (approximately 255 trillion won) in the second quarter.
China's reported holdings of U.S. Treasuries also declined to $618 billion (approximately 840 trillion won), their lowest level since August 2008.
Analysts attribute this to China's efforts to diversify its assets into gold, government agency bonds and other investments.
Setser said demand for U.S. Treasuries from overseas investors had declined as the United States was running a large fiscal deficit, adding, "It appears that the whole world is enthusiastic about U.S. stocks."


[email protected] Lee Seok-woo, International Affairs Specialist Reporter