Selling of dollar assets signals start of longer-term shift, warn investors

Investors say US resources for the resurrection market in Europe indicate a long -term action to cut their huge exposure for dollar investment by dumping pension funds and other large institutional money managers.

Wall Street Banks say that they are seeing signs that investors in trader millions of dollars have begun to trim their US positions, involuntary policy makers, overwhelmed President Donald Trump’s Federal Reserve’s chair at attack and trade war as a result of the attack.

Although Trump’s so -called “Liberation Day” tariff announces has been almost over the world market since last month, US stocks have almost restored their losses, they remain in the negative region behind this year and worldwide colleagues. This year has dropped more than 7 percent of the dollar, some investors “point to”Capital aircraft“Other resources from the US, such as the German government’s debt.

“This is happening. It will be slow but inevitable,” said Luca Paolini, the main strategist of the Pictite Asset Management. He also added that a mixture of a relatively cheap equity market and catalysts for European economic growth as a German -led defense expense was made as a “most logical” destination for Europe.

Has been seen in a bank of America survey Investors have cut “the biggest of all time” Our equity allocated in March, when the world’s largest economy and transfer to Europe were the worst since 1999.

The European-Dumicield Exchange exterior is using the business fund-analysts to invest in US Debt and stocks to visit the Shift-then reached $ 2.5 billion in April, according to data from early 2023, according to the Morningstar Direct data. The same equity ETFs have seen more flow in early May, though the fixed-earning equivalent has attracted some money back.

Dollar sales sale “a long -term trend where US resources were consistently beneficiaries of strong net flow”, said Kenneth Lamont, principal of the Morningstar. The opposite has been run by the transfer of “patriotic” in the domestic sector as a defense among European investors.

On a large shift sign in Global Capital, Euro has grown at the same time like the German government bond in recent weeks, confusing the general pattern and investors are advising not seeking non-dolar shelters. Investment banks have sustained US dollars and have sustained the purchase of Euro in spot transactions by institutional investors.

Bank of America Global G10 FX Strategy chief Thanos Vamvakidis says the bank has begun to see “the real money [institutional] The dollar is being sold in recent weeks.

The Veritus Pension Insurance Agency in Finland has reduced its US equity exposure to the first quarter. Chief Investment Officer Laura Wickstrome told the Financial Times that US stocks were high, while he also mentioned “uncertainty and contact surrounding tariffs.”

John Pierce, a 149 billion dollar Australian pension scheme is the main investment officer of the UNISPER, says about it Podcast The last month that his fund was quite a big exposure to US assets and it would “be questioned with that promise”.

“Really, I think we have seen top investment in US property,” he added.

Danish pension fund Start In the first sale quarter of their first stocks since 2022, they have purchased the largest European listed shares since 2018.

Sam Linton Brown, the Global Head of Macro Strategy of BNP Transport, says that if European Pension Fund can reduce their allocation to 20 levels, it will be equal to $ 300 billion in dollar assets.

The United States is beneficial to extensive capital flows over the years, its economic growth and the fluidity of its markets and the performance of the scene of strong.

Wellington Management Rate Strategist John Butler said, “If the globalization of capital goes against the globalization, the question makes it far and faster.” “This [trend] The US dollar, equity and bond market should be the result of the exterior of net capital in the United States and other markets with structural impacts for markets. “

Analysts focus on the depth and fluency of the US stock market and the near-$ 30TN Treasury Market, which is limited to how far this trend can go.

Even US pension funds are considering their position. California’s $ 350BN State Teacher of Retirement Officer Scott Chan said at a board meeting this week that “one of the involuntary risks and consequences of opening Pandora’s box on duty” may be sold by US assets by its largest business partners.

Chan said, “The question for us is what we need more diversity because we are very focused on US wealth.”

This year the dollar slide has been especially painful for foreign investors who own US assets but did not hedge the risk of the currency.

The Bank of America assumes that if these hedges return to the level of pre-covid hedgeing, European investors can hedgeing $ 2.5tn at the risk of currency in their dollar assets. This type of activity will be expected to press the low pressure on the dollar.

However, many investors are not rushing to any decision, aware of the risk of betting against long -term growth in the US market.

“We are internal debate about our exceptionalism [and] Whether we reduce our allocations, “said an investor.” Experience says that you need to be careful with these shifts and to bet against the United States did not work well. “

Alan Livsi’s Additional Report