Monday, March 30, 2015

Foreigners Love U.S. Stocks

There has been much hand-wringing over the idea that foreign investors hold a sizable amount of the debt offered by the U.S. Treasury - $6.2 trillion, according to figures released by the Federal Reserve last week. But it has largely escaped notice that foreign investors own nearly as big a chunk of U.S. stocks, amassing a total of $5.9 trillion by the end of 2014.

Foreigners pumped a total of $121.7 billion into our stock markets last year, an increase of 14 percent over the year earlier. Meanwhile, the amount they put into U.S. Treasurys increased by just 6 percent, suggesting that, at current trends, foreigners could own more stocks than T-bills before too long.

These foreign investors seem a lot less interested in our U.S. corporate bonds. Foreign investments in those instruments increased by only about 4 percent last year.

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