Published July 13, 2009

US investors' sale of foreign stocks down sharply

By CHUANG PECK MING

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(SINGAPORE) The heavy selling in global stock markets that came in the wake of the credit crunch last September has slowed to almost a trickle - at least for American investors.

They sold just a net US$3.84 billion of their global stock holdings in the first three months of this year, down sharply from US$42.58 billion in the previous quarter helping in part to ease the drop in share prices outside the United States.

Global stock prices excluding those in the US fell an average 10.62 per cent in the first quarter of 2009, from around 20 per cent in the October-December 2008 period.

US investors unloaded a net US$132 million in Singapore-listed shares in the January-March quarter, only a fraction of the net US$4.07 billion they dumped in the final quarter of last year as the financial crisis deepened at its epicenter in the US, according to the latest figures released by the US Treasury Department. US investors picked up a net US$543 million of Singapore shares in July-September 2008.

Still, the net sale of Singapore stocks in the first quarter was the third largest US divestment in Asia in the first three months of this year. Japanese stocks, which make up the largest chunk in US investors' Asian portfolio, was the largest (US$3.43 billion), followed by Hong Kong stocks (US$353 million).

But these sales were far smaller than those made in the fourth quarter of 2008, when US investors sold a net US$8.99 billion of Japanese stocks and US$1.51 billion of Hong Kong stocks, according to the US Treasury figures.

Except for China, India, Indonesia and South Korea, US investors generally cut back on their holdings of Asian stocks in the first quarter. Overall, they sold a net US$2.05 billion in Asian stocks, down sharply from US$19.25 billion in the fourth quarter of 2008. They purchased a net US$127 million in Chinese stocks, US$62 million in Indian stocks, US$145 million in Indonesian stocks and US$1.12 billion South Korean stocks.

Excluding Japan, Asian stocks edged up an average 0.66 per cent in the first quarter of this year. Japanese share prices fell 16.57 per cent. Asian stocks excluding Japan were down 21.48 per cent in the previous quarter, while Japanese stocks declined 9.0 per cent.

With the money they netted in the previous quarter's sales of stocks, US investors appeared to have shifted focus to global bonds. They snapped up a net US$29.75 billion in the debt instruments in the first quarter, a big chunk of them from Europe, according to the Treasury figures. The investors also bought a sizable amount of Australian (US$5.76 billion) and South Korean (US$5.09 billion) bonds.

But US investors generally shunned Asian bonds in the first quarter of this year, preferring to shed their holdings instead. They let go of US$3.79 billion in Asian bonds, reversing the position held in the fourth quarter of 2009 when they picked up a net US$959 million in Asian bonds.

US investors sold a net US$1.64 billion in Singapore bonds in the first three months of this year, up from US$405 million in the previous quarter. They dumped a net US$3.07 billion in South Korean bonds, the biggest amount in Asia. The second largest was Hong Kong bonds (US$2.62 billion), followed by Chinese bonds (US$1.62 billion).