In a striking paradox that underscores the enduring power of the American financial system, foreign investors are increasingly vocal in their criticism of the United States — yet continue to pour record amounts of capital into its stock markets. Despite a global wave of anti-American sentiment, particularly in the wake of Donald Trump's re-election and his administration's assertive foreign policy moves, the flow of foreign investment into US financial assets has reached unprecedented levels.
According to a recent analysis published in the Financial Post, foreign investors injected approximately $1.6 trillion (£1.169 trillion) into US financial assets in 2025, with nearly $700 billion (£511.6 billion) directed into equities alone. This marks a significant increase over previous years and reflects a sustained pattern of foreign capital inflow, even as geopolitical tensions and policy shifts have eroded the US global image.
The trend is not limited to equities; foreign purchases of US corporate bonds have also surged, reinforcing the perception that America remains the world's most attractive investment destination despite the rhetoric.
A Pattern of 'Buy the Dip'
One of the most notable aspects of this investment behaviour is its consistency. Throughout 2025, foreign investors were net buyers in every month except for a brief 'sell America' wave in April. This pattern mirrors the behaviour of retail investors in the US, who often 'buy the dip' during market volatility.
In a similar fashion, foreign investors have become adept at navigating after-hours trading platforms, particularly in financial hubs like Singapore and Seoul, where round-the-clock access to US markets allows them to act swiftly on market movements.
This behaviour is not driven by affection for American politics or leadership. Instead, it is rooted in inertia, institutional habit, and the perception that the US market remains the most liquid and efficient in the world.
Even as concerns grow over the sustainability of the US current account deficit which was fully financed by foreign portfolio inflows last year, investors continue to see the American market as the least bad option.
The Role of Technology and AI
A key driver behind the continued foreign investment in US stocks is the dominance of American technology companies, particularly in the artificial intelligence (AI) sector. South Korea emerged as the single largest source of foreign capital flowing into US equities in 2025, fuelled by a national enthusiasm for AI-driven assets.
This trend reflects a broader global belief in the technological superiority of US firms, despite growing competition from China, which has demonstrated that it can produce AI models with comparable performance at lower training costs.
However, the AI boom may be a double-edged sword. As the market increasingly prices in the potential of AI-driven growth, the uncertainty around which companies will ultimately dominate the AI race is rising.
A potential collapse in AI-related stock valuations could disproportionately affect US equities, especially since more than half of the US economic growth in 2025 was attributed to AI-related capital investments.
The Risk of a Sudden Reversal
Despite the current influx of capital, the nature of foreign investment into the US has shifted. While foreign direct investment, such as factories and long-term business ventures, has remained weak, portfolio flows into stocks and bonds have surged. This means that the capital is 'hot' — easily reversible — and could be withdrawn rapidly if investor sentiment shifts. The fact that foreign institutions now own nearly 15 per cent of US stocks, a record level, underscores the extent to which America's economic health has become dependent on the goodwill of foreign investors.
Originally published on IBTimes UK
Join the Conversation