Initial Wave of Bargain Hunting Gives Way to Profit-Taking as Markets Recover
When President Trump’s new tariff announcements roiled markets in April, retail investors across Asia rushed to buy the dip in US equities. Now, fresh data reveals these same investors are rapidly withdrawing from American markets just as stocks approach historic highs.
Regional Withdrawal Patterns Emerge
Official figures show:
South Korean retail investors executed their first net sales of US stocks in May, dumping over $1 billion in shares – the first such outflow since Trump’s election victory last year
Japanese retail traders became net sellers of US ETFs, offloading approximately $166 million worth of shares in May (the largest reduction since April 2023)
Singaporean traders reduced US stock purchases by 25% compared to April, according to local brokerage data
Interactive Brokers Chief Strategist Steve Sosnick noted: “They were incredibly aggressive when markets were low, but the buying momentum has clearly weakened.”
Profit-Taking After Successful Bet
This retreat comes as even some of the world’s most astute risk-takers begin questioning the sustainability of US equity gains. Asian retail investors had aggressively purchased American stocks and ETFs during Trump’s “Liberation Day” tariff turmoil, even as Wall Street panicked. Their timing proved prescient:
- S&P 500 plunged 12% from April 2-8
- Has since rebounded more than 20% from those lows
While US assets have largely shrugged off broader global concerns, the “sell America” trade has:
- Weakened the dollar in recent months
- Triggered violent swings in Treasury markets
Market Recovery Meets Political Uncertainty
The slowdown in Asian retail demand coincides with weakening momentum in the S&P 500’s rally. Though still within 2.5% of its February record high (6,147.43), the index has gained less than 1% over the past three weeks – a rare period of calm after months of volatility.
Industry observers emphasize Trump’s unpredictable policy shifts remain the dominant variable:
- Sudden announcements can roil markets within hours
- Reversals create whiplash for global investors
A 25-year-old Singaporean investor who bought “significant” amounts of growth stock and US index ETFs summarized the sentiment:
“Now that markets have returned to previous levels, I’m not committing more capital than usual. But if Trump makes another market-crushing announcement, I’ll buy the dip again.”
Persistent American Optimism
Despite the withdrawal trend, some Asian investors maintain strong US market convictions:
- US equities have outperformed Asian indices over the past decade
- Tech sector dominance continues attracting capital
- Many view American markets as a “safe haven” despite volatility
Nam Yong Soo, ETF management head at Korean investment firm, noted: “Most Korean investors maintain firm beliefs in US stocks.”
This dichotomy highlights the complex psychology driving cross-border retail flows – where recent profits compete with lingering geopolitical concerns about the world’s largest economy. As Trump’s policy trajectory remains unpredictable, Asian investors appear to be adopting a more cautious approach to their previously favored US exposure.
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