DOLLAR SALE SEE SIGNALS START OF LONG TERM CHANGE

The discharge of American assets in favor of the resurgent markets of Europe indicates the start of a long-term play for pension funds and other major institutional money managers to reduce their huge exposure to dollars investments, according to investors.

Wall Street banks say they are seeing signs that investors who manage trillions of assets begin to cut off their US positions, for concern about misconceptions, President Donald Trump’s attacks on Federal Reserve President and the fall of trade war.

Although American stocks have almost regained their losses since the so-called Trump’s Liberation Day Tariffs last month, they remain in a negative territory this year and behind the world’s companions. The dollar has dropped more than 7 percent this year, with some investors pointing “Flight Capital“From the United States to other assets such as the German government debt.

“It is happening. It will be slow but inevitable,” said Luca Paolini, no picture of Pictet Asset Management. A combination of relatively cheap capital markets and catalysts for European economic growth, such as a German -led expense destination, made Europe the most logical destination, “he added.

A Bank of America survey showed it Investors made the “bigger For the North -American Capital Assignations in March, while the change in the world’s largest economy and to Europe has been the strongest since 1999.

The departures of the European Home Stock Exchange marketed funds by investing in debts and shares from the United States (an area that analysts used this change) then reached 2.5 million euros during April, the highest level since the beginning of 2023, according to Morningstar Direct data. Capital ETF themselves have seen more outings in early May, although fixed income equivalents have attracted some money.

The sale of dollars assets “reverses a long-term trend in which American assets have been the beneficiary of strong clean tickets,” said Kenneth Lamont, director of Morningsar. This reversal has been partly driven by a “patriotic” change among European investors to national sectors such as defense.

In a sign of the great shifts of global capital, the euro has increased at the same time as the obligations of the German government in recent weeks, confusing the usual pattern and suggesting that investors seek non -dollar shelter assets. Investment banks have reported sustained American dollars and the purchase of euros in specific transactions by institutional investors.

Thanos Vamvakidis, responsible for the Global G10 FX strategy of the Bank of America, said that the bank had begun to see “real (institutional) money that came only in recent weeks”. George Savelos, a FX World Officer of Deutsche Bank, said he had seen “significant sale of American dollars of real money investors for the last three months.”

Finland’s Veritas Pension Insurance Company reduced its exposure to North -American Capital in the first quarter. Investment director Laura Wickström told Financial Times that the evaluations of U.S. shares were high, while also cited “uncertainty and communication around rates … The confusion and unforeseen unforeseenness of this made us question the idea that you should pay for this type of premium.”

John Pearce, investment director in a $ 149 million Australian pension scheme, said his podcast Last month, its fund had a fairly large exposure to U.S. assets and would be “questioning this commitment”.

“Frankly, I think we have seen a maximum investment in U.S. assets,” he added.

Danish pension funds embark In the first quarter of its first sale of North -American shares since 2022, making its larger purchase of European shares listed since 2018.

Sam Lynton Brown, BNP Paribas’s Global Macro Strategy Manager, said that if European pension funds reduce their allocations to 2015 levels, this was to sell up to € 300 million in dollars.

The United States has been a beneficiary of large capital entries for years, attracted by its economic growth and the liquidity and strong performance of its markets.

“If the globalization of capital is behind, the question becomes the extent to which,” said John Butler, a Wellington Management rate strategist. “This (trend) should give rise to the net capital outings of the United States and other markets, with structural implications for the north -American dollar, heritage and the markets of bonds.”

There are limits to the extent to which this trend, according to analysts, can be reached, given the depth and liquidity of the U.S. Market of Securities and the Treasury Market about $ 30.

But even North -American pension funds consider their position. Scott Chan, director of investment in the retirement system of state -owned $ 350 million in California, said in a board meeting this week that one of the “unwanted risks and consequences of opening the Pandora box on the rates” could be a sale of North -American assets by its largest commercial partners.

“The question for us is that we need greater diversification because we are very focused on U.S. assets,” said Chan.

The dollar slide this year has been especially painful for foreign investors who owned North -Americans but did not cover the risk of currency.

Bank of America estimates that if they reconstruct these coverage at pre-coocid coverage levels, this could mean that European investors charge 2.5 TN of currency risk in their assets in dollar. This activity is expected to push down on the dollar.

However, many investors do not rush to a decision, aware of the risks of betting on the long-term growth of American markets.

“We have an internal debate about exceptionalism (i) if we reduce the assignments,” an investor said. “Experience says that you need to be careful with these shifts and that the bets on the United States have not worked well.”

Alan Livsey’s additional reports