Deutsche Bank: US assets lose their attractiveness among foreign investors

Despite the recovery of the markets over the past week, foreign investors still play the purchase of US assets, according to Deutsche Bank AG. To analyze the behavior of foreign investors almost “immediately” in recent weeks, George Saravilus, head of the foreign exchange strategy at Deutsche Bank, has the flow received in a variety of funds receiving money from abroad and receiving in US stocks and bonds. The data shows a ‘sharp stop’ in the purchases of foreign investors of US assets over the past two months, without any indications to improve the situation last week, even with the start of the fad of the fog that prevailed on the markets, according to Saravilus in a note on Monday. The report said: “Our general conclusion is that the evidence that has so far been withdrawn from money flow indicates, in the best scenarios, a sharp slowdown in capital to the United States, and at worst, after the ongoing direct exit from US assets,” the report states. He added: “Which of these two interpretations is a challenge against the US dollar as a currency suffering from a financial and commercial deficit.” The change in the US dollar was changed, the strategic analyst at Deutsche Bank was optimistic about the dollar, especially against the euro, longer than a year to last February. Since then, however, it has become one of the most pessimistic votes and warned that the dollar could lose its position as a global reserve currency if the economic policy of US President Donald Trump forced investors to abandon the US assets they had accumulated over the past decade. Although the United States has always been an attractive destination for foreign assets, capital flow to US markets has been especially striking over the past few years, with the US market’s superiority towards the rest of the world markets. According to the estimates of the Deutsche Bank, the share of US assets in European investors doubled four times to 20% in 2024, compared to only 5% in 2010, and Japanese investors doubled up to 16%. Increasing pressure on US assets, but the dollar fell along US equities and treasury bonds, after Trump announced his plan in early April to impose customs duties on commercial partners. The simultaneous buying wave jointly raised the fear of the withdrawal of foreign investors from the US market. To obtain a more updated reading of these trends, Saravilus said he followed the daily flow to approximately 400 investment funds that focus on the US market and registered abroad, as well as monitor the weekly data for a broader and closed investment fund. “The conclusion we have reached through these two tension does not seem encouraging,” Saravilus wrote. The acceleration of the investment funds accelerated the report that the continued sale wave appeared more clearly in the data of the circulating investment funds, as investors sold both shares and bonds. In the largest group of funds that Saravilus monitored, which includes investors moving at a slower pace and a larger number of investors outside of Europe, where the investors seem to have stopped buying US shares, without becoming more clear sellers. As for the effects, the data showed ‘intensive sales’. In this context, Saravilus has reduced its expectations for the performance of the dollar, pointing out that Trump’s policy reduces the appetite of foreign investors to finance the trade and budget deficit shortage in the United States. The strategic expert expects the US currency to fall to $ 1.30 by 2027 against the euro and 115 against the yen, compared to about $ 1.14 and 142 yen today.