International investors now account for approximately 18 percent of all US equities, marking the highest level since at least 1945. This represents an impressive value ranging from $18 trillion to $20 trillion in American stocks held overseas.
It is essential to recognize that this trend is not solely driven by increased foreign buying. A substantial part of the growth results from valuation gains, where previously held stocks have appreciated significantly in value. At the same time, foreign investment continues to flourish, with private inflows into US stocks reaching a record high of $646.7 billion over the 12 months leading up to September 2025, according to data from the US Treasury’s International Capital.
#Who is investing and why does it matter?
Foreign ownership of US equities is primarily dominated by traditional economies, notably the United Kingdom, Canada, and Japan. Investors from emerging markets typically favor safer assets, such as US Treasuries, rather than direct investments in equities.
Currently, US equities represent a significant fraction of foreign investors’ total financial assets in the United States, varying between approximately 30 percent and 61 percent depending on specific measurements. According to the Federal Reserve, foreign holdings of US equities are estimated to be around $18.6 trillion for 2025.
#What implications does this have for market dynamics and liquidity?
The influx of foreign capital contributes to enhanced liquidity in the market, which generally results in tighter bid-ask spreads and lower transaction costs. Nonetheless, a higher volume of foreign investments also makes the market more vulnerable to geopolitical developments, currency volatility, and policy adjustments happening in other countries far from the core financial activities of Wall Street.
#Why is cryptocurrency missing from this investment landscape?
Despite the significant capital flowing into US financial assets from international sources, there is minimal evidence indicating that foreign institutional and sovereign investors are significantly allocating resources towards digital assets. The flow of $646.7 billion into US stocks highlights a capital reserve that the cryptocurrency sector has only begun to engage with.
In summary, foreign investment in US equities not only reflects a growing confidence in the market but also underscores the importance of understanding the broader implications for market dynamics and asset liquidity as investors navigate a rapidly changing financial landscape.