Foreign investors have pulled an estimated $63 billion from US equities since the beginning of March, according to Goldman Sachs strategists, who warn that the trend could pose risks to equity valuations. In a note to clients, the team led by Daniel Chavez pointed to high-frequency fund flow data showing that European investors have been the main sellers, while other regions have continued to accumulate US stocks.
“This dynamic poses a substantial risk to equity valuations because foreign investors entered 2025 with a record 18% ownership share of US equities,” the Goldman team wrote.
The sharp reduction in holdings comes at a time when international participation in the US stock market had reached historic highs. According to Goldman, since 1980 there have been 10 previous instances of significant foreign investor selling. On average, those episodes resulted in the equivalent of 0.6% of total US market value being sold — about $300 billion in today’s terms.
Despite the current pace of outflows, Goldman noted that this episode has so far been “shorter and shallower” than past sell-offs. Historical data suggests that US equities have often managed to rise even amid foreign withdrawals. In fact, in seven of the ten previous instances, stocks posted gains, with only 1987, 1990, and 2022 registering declines.
While the recent selling wave has yet to trigger broad market weakness, the outsized ownership share of foreign investors means their behaviour remains a key variable for equity markets going forward.
(With input from Bloomberg)