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The US Treasury International Capital report released this week highlighted historic demand for American equities from overseas private investors in May. Foreign private sector net purchases reached $120.8 billion, rising from $85.6 billion in April and trailing only the November 2024 peak, according to the TIC figures. Kit Juckes, head of FX strategy at Societe Generale in London, said it was still really, really hard to see evidence that the rest of the world is shunning US assets.
A significant rotation within the US technology and AI space has seen investors sell shares in hyperscalers bearing the brunt of capital spending on infrastructure while favoring semiconductor firms that benefit from that outlay. The S&P 500 software and services index has dropped 17 percent year to date whereas the Philadelphia Semiconductor Index has climbed 75 percent, index compilations show. May delivered solid gains for Wall Street overall, with the S&P 500 advancing 5 percent and its technology sector surging 16 percent.
Institute of International Finance data recorded non-resident sales of $27.9 billion in South Korean stocks during May, swelling to $30.5 billion in June for the largest monthly outflow in more than 25 years. Taiwan saw $18.3 billion pulled from its equities in June, the second-biggest such exodus on record, with the IIF placing cumulative year-to-date sales at nearly $100 billion for South Korea and $20 billion for Taiwan. These movements stand in stark contrast to the sustained buying of US shares.
Equity benchmarks in South Korea and Taiwan act as proxies for global views on artificial intelligence because of their concentration in a few major technology and semiconductor names such as Samsung, SK Hynix and TSMC. Both markets have posted strong advances this year yet have also suffered sharp reversals that pushed realized volatility to historic extremes, market data indicate. Analysts link part of the turbulence to the rising role of highly leveraged domestic retail investors in those jurisdictions.
A Reuters report on July 10 noted that South Korea and Taiwan led a $46.1 billion net withdrawal from emerging market equities in June, according to the Institute of International Finance. Such volatility makes it harder to attract foreign capital back without a meaningful and sustained correction in prices. Trading Economics figures separately placed overall net long-term TIC flows at $232.7 billion in May, up from $104.8 billion the month before, pointing to broad foreign interest in US assets.
The Treasury statistics come with an inherent lag, so any effects from tremors in the US technology sector during June will only appear in later releases. For now the combination of robust May inflows into the United States and concurrent selling across Asian AI proxies suggests investors retain a clear preference for Wall Street exposure. As one Reuters columnist observed, global ‘FOMO’ keeps fueling Wall Street’s AI exceptionalism, directing capital toward the perceived stability of American markets in the ongoing technology trade.
