Foreign capital is leaving the United States equity market in large volumes, according to a widely followed market analyst.
Citing data from Goldman Sachs, macro analyst Adam Kobeissi reports that $37 billion left US equities in May, which is the most in at least 12 months.
“This marks the 2nd consecutive monthly net withdrawal after -$7 billion in April.
Year-to-date, foreign investors have withdrawn a net -$31 billion from US equities.
By comparison, these same investors bought a net +$201 billion in November and December last year.
This comes even as the market recovers and the 90-day reciprocal tariff pause that began on April 10th.
Foreigners are rotating out of US stocks.”
However, Kobeissi also reports that retail investors are picking up the slack, buoying markets, potentially compensating for foreign investors’ capital flight. Citing data from JPMorgan Chase, the analyst reports that retail investors are gobbling up tens of billions of dollars worth of exchange-traded funds (ETFs) and individual equities.
“Retail investors bought +$23 billion of US equities in May, adding to +$40 billion in March and April.
This is roughly in-line with $25 billion in average monthly net purchases this year, according to JPMorgan.
Year-to-date, individual investors have bought a record +$150 billion in ETFs and single stocks.
Over the last week, retail traders purchased $6.8 billion, with $4.4 billion flowing into Tesla, TSLA.
However, the average retail investment portfolio is now down -2.6% year-to-date, underperforming the S&P 500’s increase of +1.0%.
Retail is going all-in on this market.”
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