The big money: distrust against Trump: Capital escape from the USA to Europe

Europe’s stock exchanges overhauled the US markets in the first half of 2025 for the first time in many years-thanks to US President Donald Trump. According to investment managers and economists, international investors have deducted high billions of billions from the US markets and relocated to Europe. The main reason for the Capital escape from the United States is therefore in customs threats and erratic change of course in Trump. This means that the international flows of money changed the direction at least for the time being. Because in previous years immense sums flowed into the USA.

European main winners are the stock exchanges in Germany, Spain and Italy, each with double -digit price gains. The DAX has increased by around 16 percent since the beginning of the year despite the recent losses. The US stock markets, on the other hand, recorded only a meager climber of less than two percent.

Investor money sloshes back to Europe

“Numerous evidence indicates a significant movement of investor funds from the USA towards Europe, but also to other regions such as Japan,” says Ludovic Subran, at which Allianz as Chief Investment Officer is the main person responsible for the investments. With almost 2.5 trillion euros, the Munich Dax Group is one of the guild international sizes.

Previously, the big money from all over the world had flows to the US financial markets for years. One consequence is that shares in the United States are expensive in terms of companies, but comparatively cheap in Europe. “The net position of portfolio investments in the USA will be accumulated at the end of 2024 at around $ 17 trillion,” says Vincenzo Vedda, Global Chief Investment Officer at DWS, the asset manager of Deutsche Bank. The DWS is also a heavyweight with a trillion that is managed by a trillion.

The “rediscovery” of Europe

“This has changed now,” says Vedda. “From a strong overweight overweight of the United States by the fund managers at the end of 2024, such a significant underweight.” Vedda calls two trends: “First, the rediscovery of Europe and its shares. The interest came from both Asia and the USA, but the Europeans themselves have rediscovered their” home market “.”

Second, according to Vedda’s words, several investors felt the urge to “reduce the US exposure and diversify more.” In addition to political development in the United States and the fact that a number of investors had previously built up a very large obesity in the United States, the main drivers were also concerned about another dollar weakening.

International payments are not yet available, but the access and drainage at ETF stock funds are not yet public. BayernLB chief host Jürgen Michels refers to data from the US financial information service provider Morningstar. According to this, 26 billion flowed in the first quarter of 2025. Euro in European equity funds after there had previously been net drains for twelve quarters – i.e. for three years. In April and May, Netto then flocked to European funds from 22 billion euros.

Dwindling confidence in the USA …

“The uncertainty through US politics and dwindling confidence in the United States should have played a major role in this development,” says the economist. There was a strikingly strong net outflow from all US funds in April-after Trump announced his “Liberation Day” and had announced the greatest US forecasts since the days of the World Economic Crisis in 1930.

… and a little more optimism in Europe

“The increased interest according to European shares is also carried out by more confidence about the perspectives in Europe,” says Michels. According to the BayernLB chief economist, the fiscal package of the new federal government contributed to this. “Against this background, investors no longer seem to be willing to accept the historically exceptionally high evaluation of US shares compared to European shares.”

Italy more solid than the USA?

Not only the stock markets are striking: the United States currently pays significantly higher interest rates of around 4.4 percent for ten -year government bonds than Italy with 3.5 percent. Traditionally, the Italian bonds are more of interest – the risk premium for the country’s high debt.

This has also occurred in the past, as the experts surveyed say. “Nevertheless, the recent increase in US interest rates compared to Italy indicates that markets are increasingly concerned about the US state debt. At the same time, the fiscal political situation in Italy has improved significantly,” says Allianz chief investor Subran.

US state debt increases rapidly

Because the liabilities of the United States have almost doubled in the past ten years: from $ 18.1 trillion in autumn 2015 to $ 35.4 trillion in autumn 2024, as can be seen from the US Ministry of Finance. Trump drove up the debt in his first term despite the well-running US economy, successor Joe Biden fought Corona pandemic with loans.

“Nevertheless, the US dollar will remain the dominant currency in the medium term and US systems will remain the backbone of the global financial world, not least for a lack of alternatives,” says Chief Investment Officer of the Allianz.

Since Trump has so far only put his original customs threats into practice in a weakened form, the fear of the financial markets before escalating trade wars from the United States with the rest of the world has also subsided. With his tendency to quickly return to the partial withdrawal after martial threats, the US President has been dealing with the ridicule name “Taco” in the financial world: “Trump Always Chickens Out”, Trump always pinches.

To a lesser extent, however, the trend could continue in the second half of the year, according to the corresponding assessment. “We think that the urge of international investors should stop aligning their portfolios a little less US-heavy,” says DWS boss Vedda.