International Investment Jumps 57% In May
According to the U.S. Treasury Department, foreign investment increased 57% between May and June this year, as foreign investors pounced on American stocks and corporate bonds. This reflects a tremendous swell of global confidence in the U.S. marketplace.
The foreign purchase of American equities and corporate debt soared to record highs in the month of May. International purchases of U.S. stocks showed a net increase of $41.9, up from 27.4 billion in April and corporate bonds had even better showing bringing in $72.6 billion, up from $33.5 billion.
The total holdings of equities, notes, and bonds climbed to a net $126.1 billion from $80.3 billion in April. Meanwhile, U.S investors bought a net $37.3 billion overseas, compared to the $17.1 billion a month prior.
Investment in U.S. Treasuries went up as well. The United Kingdom and Japan each increased their holdings, $33.1 billion and $400 million respectively. China who has been eager to unload its stockpile of U.S. Treasuries reduced its holdings by $6.6 billion.
Much of the foreign investment frenzy was no doubt a result of relatively inexpensive U.S. stock. As of June 30, the price to earnings ratio of the S&P 500 is 17.94, a compelling bargain for international investors.
