US Cross-Border Securities Trading Trends

Forging New Patterns
by Anshuman Jaswal, PhD, August 22, 2012
North America

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.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

3

Market Overview

4

 

Foreign Investment into US Markets, by Region

5

 

US Investment into Foreign Markets, by Region

7

 

Investment into US Securities, by Product

9

 

Investment into Foreign Securities, by Product

11

 

Leading Global Markets

12

Conclusion

28

Appendix: Investment Flows Vis-a-Vis Leading Global Markets

30

Leveraging Celent’s Expertise

33

 

Support for Financial Institutions

33

 

Support for Vendors

33

Related Celent Research

34

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