Foreign Holdings of US Securities Have Exploded

200452489-001Foreigners now hold more than $13 trillion in American securities, a record set as the U.S. seeks to assert itself as the safest port in troubled global waters.

China and Japan combined owned more than $3.4 trillion, including $2.4 trillion in debt, a number that has grown since the data set was compiled.

The total value of U.S. stocks and bonds under foreign ownership rose 6.5 percent in 2012, with stocks actually rising more on a percentage basis, according to the most recent data from the U.S. Treasury.

Foreign holdings have more than doubled since 2005 and are getting close to the $15 trillion total size of the U.S. economy

Of the $13.26 trillion total, $4.2 billion was held in stocks, a 10.6 percent increase from 2011. Long-term debt holdings grew to $8.2 trillion, a 6.2 percent annual rise.

Holdings of short-term debt actually contracted to $811 billion, falling 7.6 percent.

The totals compare to about $60 trillion in total U.S. debt and equity holdings, meaning that foreigners hold about 20 percent. The greatest percentage of any class is in marketable treasuries, which are owned 52 percent by investors outside the U.S.

The move to U.S. assets came as the American stock and bond markets delivered solid returns for the year despite a stubbornly slow economic recovery, political turmoil and headwinds from other shores.

In fact, it may have been that geopolitical turmoil, particularly involving the European sovereign debt crisis and slowing growth in China that helped buttress foreign money into the country.

Japan leads the way in American holdings with $1.83 trillion, the great majority of which was in bonds. China was second at $1.59 trillion, of which $1.18 trillion was in debt, a number that has increased to $1.22 trillion since the June 30, 2012, cutoff for the data.

Interestingly, the Cayman Islands is the third-biggest holder of securities and the largest overall of stocks, with $516 billion. That is likely due to the attractiveness of the region as a tax haven for American cash.

The gain in U.S. assets has come with the help of the Federal Reserve. The central bank has been purchasing $85 billion a month in debt, which in turn has helped provide liquidity to the equity markets.

Central banks, though, are getting increasingly more competitive, and the Fed will have plenty of competition this year from global money printers seeking to draw foreign capital.

 

Source : CNBC

 

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About thomasdinnocenzi

Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. http://www.NovaAdvisors.com thomas@NovaAdvisors.com USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
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