Reference News Network, July 1st: According to the Spanish newspaper "El País" website on June 28th, the slogan of US President Trump, "Make America Great Again," may be difficult to materialize in the US stock market. This capital market, which once occupied the top position as the preferred destination for global savings and had undeniably strong performance, is now facing a loss of leadership. With the depreciation of the dollar and years of accumulated valuation bubbles, funds are leaving Wall Street and flowing into European and Asian markets. The investment outflow caused by Trump's economic policies has already shown signs in the first half of this year, and experts warn that this is not a short-term fluctuation but a structural adjustment of investment portfolios.
A recent survey by Bank of America shows that global stock returns will surpass those of the US stock market over the next five years. About 54% of asset managers believe that international stocks will become the optimal asset class, while only 23% remain optimistic about the US stock market. 13% of respondents predict that gold will lead in returns, and 5% bet on bonds. If these predictions come true, it would reverse the profit strategy that has persisted for many years. Bloomberg data shows that in the past 15 years, the US stock market outperformed international stocks in 13 years.
Since 2025, the advantage of returns in markets outside the United States has been significant: the S&P 500 index rose 4%, matching the Nasdaq Composite Index; while the Stoxx 50 index in Europe rose 8%, the German DAX index surged 19.7%, and the Spanish IBEX 35 index climbed 20%; the Asian market also performed well, with the Hong Kong Hang Seng Index rising 21%.
190 fund managers surveyed expressed a pessimistic outlook on the US investment prospects: 31% of investors said they have reduced their exposure to the US dollar, reaching the most pessimistic level in 20 years. 36% of investors said they have reduced their exposure to US stocks.
The survey findings are already reflected in actual data: The largest European asset manager, Amundi Asset Management, pointed out that by mid-month, 40 billion euros have flowed into the European stock market, while only 10 billion euros have flowed into the US market. The main reason is that European investors have started to repatriate funds, with about 50% of their investment portfolios originally allocated to the US market under Trump's administration. Given the large volume of investments in the US in recent years and the strong performance of the European stock market in the first half of the year, this trend of capital withdrawal and return to Europe is expected to continue. Even though the European stock market has seen gains, the valuation advantage remains a key decision factor.
M&G asset management stated that the strategy of shifting investment portfolios from the US to Europe and Asia better aligns with the current long-term trend shift.
Analysts have observed an unprecedented anomaly: during recent Middle East conflicts, unlike previous military crises in the region, US Treasury bonds and the US dollar did not strengthen. It is also unusual for both the US dollar and the S&P 500 index to fall simultaneously, as is the case this year. Peter Smith, head of investment at Hermes Investment Management in the US, pointed out: "After injecting hundreds of billions of dollars into US assets over the past five years, international investors are initiating portfolio rebalancing. Increased volatility in the US stock market combined with weak demand for US bonds has prompted some funds to shift to gold, which has been continuously strengthening. In this context, investors should focus on opportunities outside the US. Europe has more monetary and fiscal stimulus tools to drive economic growth, combined with valuation advantages, improved earnings expectations, and a weakening dollar, which could create a historic turning point. The appeal of international stocks has reached its peak in ten years."
The management of Jupiter Asset Management in the UK noted that although the US has long dominated the global stock market, changes in trade structure, capital allocation, and policy shifts are driving a delayed transfer of funds to Europe. Europe's advancement in energy transition, especially Germany's leading defense infrastructure investment, is seen as a differentiated advantage for European stocks in the coming years.
The above experts said: "We are optimistic about sectors such as semiconductor and equipment manufacturers, which benefit from growing areas such as artificial intelligence, cloud computing, and electric vehicles, and have historical valuation advantages compared to the 'US Big Tech Seven'. We are also optimistic about European bank stocks and companies in the construction and building materials sectors with investment value."
Goldman Sachs analysts emphasized in a recent report the characteristics of Wall Street as a safe, high-quality, and deeply liquid capital allocation area, but pointed out: "The US stock market has a 50% premium compared to the global market, and this premium will narrow. The factors that drove the premium in the past were the profit growth of the US market, as well as the advantage of the dollar and the lack of alternatives. However, the weakening dollar and the emerging attractiveness of the European and Japanese markets are changing the landscape."
The shift of investments from the US to other markets (especially Europe and Asia) has already begun. This path of pursuing higher savings returns may continue for several years. Current data has already shown initial signs of the transfer, but the innovation capability, market size, and strength of US companies should not be underestimated. (Translated by Han Chao)
Original article: https://www.toutiao.com/article/7522051342539244058/
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