Under the shadow of a trade war, foreign investment in US stocks is booming. In the second quarter, the purchase amount reached $29.07 billion, setting a new record high.

In the spring, Donald Trump's initiation of a trade war and consideration of annexing Canada have exacerbated global sentiment towards the United States. There were concerns that foreign buyers would boycott American Financial Group, Inc. products. However, the situation in the US stock market is quite the opposite. According to Federal Reserve data, foreign investors bought $290.7 billion worth of US stocks in the second quarter of this year, reaching a historical high and accounting for nearly 32% of foreign investors' US asset allocation, breaking the highest record since 1968. Despite the data showing a decrease in foreign travel to the US and a lower number of purchases of American products, the attraction of the US stock market remains irresistible. This is largely due to the strong performance of technology stocks driven by the wave of artificial intelligence - companies like NVIDIA Corporation (NVDA.US), Microsoft Corporation (MSFT.US), and Alphabet Inc. Class C (GOOGL.US) continue to see their stock prices rise. Rob Anderson, industry strategist at Ned Davis Research, pointed out that despite tariffs leading many foreign consumers to boycott American products, the demand for US stocks remains strong. For example, while Canadians avoid American products, they continue to buy US stocks. Elias Galou, global investment strategy director at Bank of America Corp, cited data from the Department of the Treasury's International Capital Management division (TIC) and the Federal Reserve up to July, further confirming that foreign investors are likely to increase their holdings of US stocks by $2.8 trillion this year, totaling approximately $18 trillion, accounting for 30% of the US stock market's nearly $60 trillion value, the highest level since 1945. Although the proportion of foreign ownership in US stocks is increasing, the dollar value of foreign investments is mainly growing with asset prices, Galou emphasized that "international investors are still buying US stocks at a very strong pace." However, in terms of index returns, while the return rate of the US stock market in 2025 is stable, the performance of the S&P 500 Index is inferior to the stock market benchmarks of major markets such as Canada, Mexico, Brazil, Japan, and China - locally or in US dollars. The MSCI Global Index has risen by 15% this year and is poised to outperform the S&P 500 Index for the first time since 2017. The MSCI All Country World Index excluding US stocks has shown an even more prominent performance, rising by 22%, far exceeding the 13% increase in the S&P 500 Index. CFRA Chief Investment Strategist Sam Stovall found the behavior of overseas investors "surprising" but believed it was not due to political considerations. His analysis suggests, "When foreign investors' own markets have already reached historical highs, why do they still choose the US?" and pointed out that a weak US dollar could be a drag on returns. He assumes that foreign investments are selectively focusing on AI-themed stocks and large US tech companies - these companies have a unique weight in the US stock market, and the tech sector has already hit 26 historical highs this year. In fact, this wave of bets is not bad: since hitting bottom on April 8th, the US stock market has continued to soar, and the latest round of gains was triggered by the first interest rate cut by the Federal Reserve in a year. Fund flows show that this buying frenzy has continued into the third quarter - EPFR data shows that international investors' pace of buying US stock funds in the past three months is the fastest since March. Brian Jacobsen, Chief Economist at Annex Wealth Management, explains from a more fundamental perspective: many foreign investors who hold US assets but are hesitant to hold US Treasury bonds realize that "foreign investors' complaints are directed towards the government, not the companies." This calm judgment on financial markets may be the core logic behind the continuous influx of foreign investments into US stocks.