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Foreign investors made a record $942 billion in net purchases of U.S. stocks and mutual fund shares in the 12 months to July, accelerating the shift of foreign investment into U.S. stocks and out of debt.
These flows represented the highest rolling 12-month total in Treasury data going back to 1985.
Net purchases of U.S. stocks and investment fund shares by foreign investors jumped to $426 billion in the second quarter, up 62% from the same period in 2025, and surpassing the previous quarterly record of $299 billion in 2022, according to the Bureau of Economic Analysis.
Monthly Treasury data shows net purchases accelerated in the second quarter, from $110 billion in April to $182 billion in June, before slowing to $3.7 billion in July. Foreign investors remained net buyers for the sixth consecutive month.
The foreign inflows coincided with a gain of about 20 percent for Wall Street’s benchmark S&P 500 in the year through July, with technology stocks such as Sandisk, Western Digital and Intel among the best performers.
The S&P 500’s 14.9% gain in the second quarter – which followed a massive but short-lived sell-off triggered by the outbreak of war in Iran – was its best performance since the same period in 2020.
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The second-quarter rise was unusually large, even when compared to last year’s high foreign demand. Foreign investors bought $263 billion worth of U.S. stocks and funds in the second quarter of 2025 and $274 billion in the final three months of last year.
Foreign demand for U.S. debt has moved in the opposite direction. Foreign investors purchased a net $188 billion of U.S. debt securities in the second quarter, up from $314 billion in the first.
That came as Chinese holdings of U.S. Treasuries fell to $618 billion, their lowest level since August 2008, as Beijing diversifies into gold, agency bonds and other assets.
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Some of the second-quarter increase could reflect carryover purchases from the unusually weak first quarter, said Brad Setser, a senior fellow at the Council on Foreign Relations, but the broader trend remains one of record purchases of U.S. stocks.
The strength of stock markets in geographies such as Korea and Taiwan has led their investors to seek U.S. stocks to address concentration risk.
“These Korean stocks were rising – Samsung, Hynix – and the investors who had bought them in the past were hitting concentration limits and diversifying out of Korea into U.S. stocks or other global stocks. You rarely see more than $200 billion in capital outflows from Korea into global stocks, mostly U.S. stocks,” Setser added.
“There has been a change in flow patterns that is entirely consistent with this larger than usual inflow with the US dollar.”
The downside, he added, is less foreign demand for Treasuries at a time when the United States is running a large budget deficit.
“It feels like the world is very rich in U.S. stocks,” Setser said.
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