What's happened
In June 2025, retail investors in South Korea and Japan have shifted to net selling of US equities and ETFs, while European and Latin American stocks show significant gains. The changing dynamics reflect broader economic trends and investor sentiment amid tariff-related volatility and a weakening US dollar.
What's behind the headline?
Key Insights
- Investor Behavior: South Korean and Japanese retail investors have turned net sellers of US equities for the first time since 2016, indicating a significant shift in sentiment.
- Market Recovery: European stocks have rebounded strongly in 2025, driven by improving macroeconomic conditions and a focus on military self-sufficiency, while Latin American equities have surged over 22% year-to-date.
- Currency Impact: A weakening US dollar has enhanced returns for unhedged US investors in foreign markets, making European and Latin American stocks more attractive.
- Sector Performance: The financial services sector in Europe is particularly benefiting from the current economic climate, while real estate investment trusts (REITs) are also seeing positive returns, albeit lagging behind their global counterparts.
- Future Outlook: The ongoing volatility in US markets, particularly in technology, may lead to further shifts in investment strategies as global investors seek stability and growth in other regions.
What the papers say
According to Bloomberg, retail investors in South Korea have shifted to net selling of US equities, marking a notable change in investment behavior. Meanwhile, AP News highlights that European stocks are experiencing a resurgence, with the Morningstar European stock index performing well due to favorable macroeconomic conditions. The Independent echoes this sentiment, noting that Latin American equities have also seen significant gains, driven by a weakening dollar and improving market conditions. These contrasting trends illustrate a complex global investment landscape where regional dynamics are increasingly influential.
How we got here
The investment landscape has been volatile, particularly with the rise of AI stocks entering a bear market in March 2025. This has prompted shifts in investor behavior, particularly among retail investors in Asia, while European and Latin American markets have begun to recover from previous underperformance.
Go deeper
- What factors are driving the changes in investor behavior?
- How are European and Latin American markets performing?
- What does the weakening US dollar mean for investors?
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