The US stock market has become the global market over the last 60 years. Will that continue?

Foreign investors hold a record slice of America’s $93 trillion stock market — and they might not let go anytime soon.

As of Q4 2024, overseas investors owned $16.5 trillion, or 18%, of US equities, the highest share on record, according to Federal Reserve data. That’s up from 8% in 2000 and just 2% in the 1950s.

TINA

As globalization gripped the world, the American stock market became the go-to investment for trillions of dollars of capital. With the world’s largest and most innovative companies like Apple and Nvidia in the United States, if you were an institutional investor in India or an individual in Italy, there was no alternative to buying US stocks.

But with protectionist policies like tariffs looming and US stocks seeing a sluggish start to 2025 — the SPDR S&P 500 Trust is down 3% year-to-date, lagging Europe’s STOXX 600 (up 9%) and China’s CSI 300 (up 1%) — is growing foreign ownership a trend that’s likely to continue?

Researchers from Goldman Sachs, led by David Kostin, outlined in a note published Friday why they believe foreign investors will keep buying. They argued that the US market’s size and liquidity — the S&P 500 is 4x the size of Europe’s STOXX 600 and 8x bigger than China’s CSI 300 — makes it impossible to ignore for global investors looking to invest large sums.

Furthermore, though slowing growth has become a concern on Wall Street, Goldman still expects S&P 500 earnings to grow 7% annually in 2025 and 2026, outpacing Europe’s 4% and 6% growth in the same period. They also observed that a weakening US dollar — which makes US stocks cheaper for overseas buyers — could support buying: the bank expects global investors to pour another $300 billion into US equities this year, roughly matching last year’s inflows.

Of course, any significant deterioration of the fundamental US economic picture could push investors to look elsewhere.