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Foreign investors are betting on US stocks: USD risk causes skepticism
Deutsche Bank analyzes foreign investment in US stocks: optimism despite pessimism towards the US dollar.
Foreign investors are betting on US stocks: USD risk causes skepticism
Recent reports show that foreign investors are bullish on the US stock market while at the same time taking a bearish stance on the US dollar (USD). According to an article by Daily Hodl, these observations are based on a comprehensive analysis of more than 500 foreign funds and their trading activity in U.S. markets.
Deutsche Bank reports that over 80% of capital inflows into US stocks and around half of bond investments are hedged by dollar hedging. This practice, which began at the end of 2024 and has increased significantly since then, shows investors' great caution regarding currency risks. George Saravelos, global head of FX research at Deutsche Bank, explains that foreign investors are buying U.S. assets but want to avoid currency risk.
Currency risks and market developments
The US Dollar Index (DXY) has already lost over 10% this year. In particular, in July, it was noted that the DXY experienced its sharpest first-half decline in over 50 years, with a 10.8% decline in the first six months of 2025. These developments could significantly influence the decisions of foreign investors.
JPMorgan strategists confirm that despite high valuations in US stocks, foreign investors continue to invest. They find limited opportunities abroad and instead look for long-term growth in the United States. They attach importance to shareholder-friendly companies and growth-friendly policies and, above all, consider the flourishing development of artificial intelligence. This could be a key factor that increases the attractiveness of the US market for international investors.
Expectations of the financial market
The combination of an unsettling currency environment and the search for stable and growth-oriented investments shows the current market situation, which presents both challenges and opportunities. Foreign investors are cautiously navigating this complex market and increasingly using hedging strategies to protect themselves while also hoping for the potential benefits of investing in the U.S. stock market.
In summary, the mood of foreign investors in the US market is characterized by a clear antipathy towards the dollar, while the search for attractive asset classes continues unabated.