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US Cross-Border Securities Trading Trends

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22 August 2012

Forging New Patterns

Abstract

Investment flow both to and from the US has been fundamentally altered by the financial crisis. As the global economy stages a slow recovery, it has seen cross-border investment flows being impacted, and in many cases there has been stagnation or even decline.

The financial crisis has impacted securities trading flows worldwide. For example, foreign transactions in US securities declined from an average net monthly purchase of US$79 billion in the January 2001 to June 2007 (pre-crisis) period to US$41 billion in the July 2007 to March 2012 (post-crisis) period. While trading flow was impacted in the early 2000s by the dot-com crisis, the major event to have affected their levels is undoubtedly the financial crisis. The slow recovery since the latter has meant that investment flow is improving. However, post-crisis flow has exhibited much higher volatility.

In the report US Cross-Border Securities Trading Trends: Forging New Patterns, Celent studies the nature of the change in investment flow for the US and how this varies across the bond and equity markets, various regions, and leading national markets globally. The report also looks at how investors across the leading markets are reacting to the circumstances and whether they continue to invest in the same regions, markets, and asset classes as they did earlier.

“The US economy has been resurgent after the financial crisis and is beginning to forge new investment relationships with high-growth markets across the world,” says Dr. Anshuman Jaswal, Senior Analyst with Celent’s Institutional Securities & Investments Group and author of the report. “The better economic performance of the Asian and Latin American markets means that the investment flow to and from these markets vis-à-vis the US has increased compared to Europe.”

This report begins with an analysis of foreign investment into the US markets by region, looking at investment from Asia, Europe, Americas, and the Caribbean between January 2001 and March 2012. It then considers the US investment into each of these regions and how it has changed since the crisis. The next section looks at the investment flow to and from the US by products, that is, bonds and equity. Finally, the report looks at the investment relationship of the US with 16 of the leading financial markets around the world.

This 38-page report contains 49 figures and two tables.