Monday, November 4, 2013

Foreigners Fleeing for the Exits

The U.S. stock market has been roaring this year, with the S&P 500 up 24 percent for the first ten months of 2013. But there's one group of investors who have been pulling out of this market: Foreign investors. For four straight months up through August, foreign investors have withdrawn money from American stocks, including $16.9 billion in August alone.

It's both private investors and official government accounts that have been pulling out of the U.S. Private foreign investors withdrew $13.8 billion in August, while governments and other official investors pulled out $3.1 billion.

It's a wonder where all that money is going to end up. The MSCI EAFE index, the benchmark index for the leading foreign stock markets for the developed world, has had a good year with overall returns of 20% - but it still lags the S&P 500.

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