Foreign net purchases of U.S. equities over the past 12 months reached the highest level since the U.S. Treasury Department began compiling the data in 1985. The surge stems largely from gains in technology stocks driven by the artificial intelligence boom, though some analysts point to the sharp rallies in the Korean and Taiwanese stock markets as a contributing factor. As shares in the two markets climbed steeply, investors seeking diversification turned to U.S. stocks, according to this view.
Foreign Investors Buy $942 Billion in U.S. Stocks Over 12 Months
Foreign investors bought a net $942 billion in U.S. stocks and funds in the 12 months through July, a record high, the Financial Times reported on the 26th, local time.
Purchases were concentrated in the second quarter. Foreign net purchases of U.S. stocks and investment funds surged to $426 billion in the second quarter, up 62% from the same period in 2025 and surpassing the previous quarterly record of $299 billion set in 2022, according to the Bureau of Economic Analysis. Monthly figures accelerated from $110 billion in April to $182 billion in June before slowing to $3.7 billion in July. Foreign investors have been net buyers for six consecutive months.
Brad Setser, a senior fellow at the Council on Foreign Relations, said part of the second-quarter increase may reflect carryover buying from an unusually depressed first quarter, but the overall trend points to record-high demand for U.S. equities.
Diversification After Samsung, SK hynix Rallies
The influx of foreign money into U.S. equities was driven by strong earnings at technology companies riding the AI boom. Over the period, the Standard & Poor's 500 index, Wall Street's benchmark, rose about 20%, supported by better-than-expected results at SanDisk, Western Digital and Intel. Despite a brief selloff immediately after the outbreak of the war in Iran, the S&P 500 gained 14.9% in the second quarter, its strongest quarterly performance since 2020.
Robust stock markets in Korea, Taiwan and elsewhere in the region were also cited as a reason for the shift into U.S. equities. "As Korean stocks such as Samsung and SK hynix rose, investors holding them hit concentration limits, and more of them rotated out of Korea into U.S. or other global stocks," Setser said. "It is very unusual to see more than $200 billion flow out of Korea into global stocks, particularly U.S. stocks."
A concentration limit is a cap on how much a portfolio can hold in a single stock, designed to prevent excessive exposure. As share prices at Asian companies in Korea and Taiwan climbed, led by chipmakers, some holdings exceeded those caps, prompting investors to sell the shares and buy U.S. stocks instead to stay within the limits.
Setser added that overseas demand for U.S. Treasurys declined as a result, saying the world appears to be heavily drawn to U.S. equities. Foreign demand for U.S. bonds fell sharply, with overseas investors buying a net $188 billion in U.S. debt securities in the second quarter, down from $314 billion in the first quarter. The FT attributed the decline to China's diversification into gold and agency bonds, which cut its Treasury holdings to $618 billion, the lowest level since August 2008.
