Global capital is shifting massively! Non-US stocks attracted a record $13.6 billion in July, while US stocks have been sold off for three consecutive months.

In July, global non-US equity funds recorded their largest net inflow of funds in four and a half years, as investors adjusted their asset allocations due to concerns about the US economic outlook, high stock market valuations, and a weakening US dollar. Since the beginning of the year, these funds have been favored by investors as Trump's economic policies have weakened the attractiveness of the US market. The accelerated inflow of funds in July indicates a strengthening trend towards diversified allocation, especially towards Europe and emerging markets - regions that are benefiting from loose monetary conditions and improving growth prospects. According to data from LSEG Lipper, global non-US equity funds saw a net inflow of $13.6 billion in July, reaching a new high since December 2021; while equity funds focusing on the US market experienced $6.3 billion in withdrawals during the same period, marking the third consecutive month of outflows. Derek Izuel, Chief Investment Officer at Shelton Capital Management, stated: "Although the easing of tariffs was positive in the second quarter, ongoing trade negotiations and policy deadlines in the beginning of the third quarter still pose continued risks. If growth differentials continue to narrow or the Federal Reserve maintains a restrictive monetary policy, uncertainty may once again lead to outflows from US stocks." Regional market performance disparities have also become a key factor in the withdrawal of funds from US stocks. So far this year, the MSCI Asia-Pacific (ex Japan) index has risen by about 14%, the MSCI Europe index has risen by over 19%, both significantly outperforming the 7.2% increase in the S&P 500 index. Coupled with a 10% depreciation in the US dollar this year, this has amplified the returns that US investors have been receiving from international markets. Jim Smigiel, Chief Investment Officer at SEI, stated that while global asset allocation remains a focus, it is still too early to determine if recent fund flows represent long-term trends. "We believe that this is more of a strategic positioning adjustment from a regional perspective rather than a deliberate underweighting of US assets." Valuation differentials are also significant: the MSCI US index has a forward 12-month price-to-earnings ratio of 22.6 times, much higher than Asia (14.4 times), Europe (14.2 times), and the global index (19.7 times).