More Americans investing outside U.S.


NEW YORK -- For years, even while they were snapping up Japanese electronics and German automobiles, Americans remained downright jingoistic about their investments.

Their money stayed close to home -- in U.S. stocks, bonds, certificates of deposit and other instruments.

But government and private-industry data show that more capital is leaving the country for investment in foreign stocks and bonds. In the first three quarters of last year, U.S. investors poured $23 billion into foreign stocks and bonds, according to the government.

Economists say the phenomenon is a natural outgrowth of the globalization of financial markets. Communications and technological advances have made it easier for Americans to take part in overseas markets.

More recently, a decline in U.S. interest rates has made foreign bonds more attractive to American and overseas investors. Yields on British government bonds are just over 10 percent, as opposed to the 8.6 percent as of Friday on 30-year U.S. Treasury bonds.

Wall Street is gearing up to grab a piece of the action. The New York Stock Exchange, American Stock Exchange and National Association of Securities Dealers Automated Quotation (NASDAQ) system are pressing securities regulators to make it easier for foreign companies to list their stocks for sale here.

William H. Donaldson, chairman of the New York Stock Exchange, predicts that the proportion of American capital invested in foreign securities will double in the next few years. While analysts view the expansion into foreign markets as a positive step, the experts warn that such outflows could put pressure on interest rates.

Nearly 500 foreign stocks now are traded on the NYSE, AMEX and NASDAQ.

Copyright © 2020, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad