Amid the recent collapse of the American stock market, fears of capital outflows from US equities increased sharply. After the return of the United States stock indices to record highs, however, there is still a pessimistic mood among some analysts.
As noted by Reuters columnist Mike Dolan, we can now expect a significant rebalancing of US investment portfolios toward foreign stocks.
The key catalyst for this, in his view, is a 10% weakening of the dollar against major currencies in the first half of 2025. Meanwhile, in dollar terms, eurozone stocks have risen 27% this year and Germany's DAX index has surged by 37%.
According to David Kelly of JPMorgan Asset Management, after several years of exceptional gains in US stocks, most investors are still severely undervaluing assets outside the US. The prospect of a further dollar weakening may easily attract them. Morningstar strategist Amy Arnott also noted the imbalance in US investors' portfolios resulting from the market's belief in the exceptionalism of the American economy.