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Foreign Buyers Snap Up US Stocks as Well as Bonds

Tuesday, 18 Sep 2012 10:39 AM

Foreigners in July increased purchases of U.S. long-term assets, including government bonds and stocks, the U.S. Treasury said on Tuesday.

Overseas investors bought $67 billion in long-term assets after buying $9.3 billion in June. Demand for long-term Treasury debt among private and government accounts rose. Foreigners bought $50 billion in July, up from $32.4 billion in June.

China, the largest foreign U.S. creditor, increased its Treasury holdings by $2.6 billion to $1.115 trillion, the first monthly increase since April. Switzerland added $18.3 billion in Treasuries, the biggest increase among major foreign holders.

Analysts said the rise in central bank buying was tied partly to efforts to manage domestic exchange rates and keep local currencies from rising too swiftly against the dollar.

Over the last 12 months, however, China has reduced its stash of U.S. government bonds by 12.6 percent. During this time, it has allowed more currency appreciation in an effort to reduce inflation and encourage more domestic consumption.

 

More encouraging for the U.S. economic outlook was the renewed demand for U.S. equities among private foreign investors, said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.

He said strong economic data in July attracted investors to the stock market and has helped push it up 7 percent so far this quarter after falling 3.2 percent in the second quarter.

"Treasury purchases can be influenced by government and quasi-government purchases -- central bank proceeds, recycled petro-dollars," he said. "More important is private demand for equities."

Private investors snapped up some $6 billion in stocks in July after selling $7.2 billion the prior month. Including overseas official accounts, U.S. stocks attracted a net inflow of $6.4 billion in March.

Including short-dated assets such as bills, foreigners added $73.7 billion in July, up from a downwardly revised inflow of $15.1 billion the prior month.

© 2017 Thomson/Reuters. All rights reserved.

 
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Foreigners in July increased purchases of U.S. long-term assets, including government bonds and stocks, the U.S. Treasury said on Tuesday.
us,stocks,bonds,treasury
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2012-39-18
Tuesday, 18 Sep 2012 10:39 AM
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