8 hours ago
US share exodus: Aussies sell their US stocks on Trump fears
Australian retail investors are ditching the United States and moving their money to 'stable' economies on the back of US President Donald Trump's 'Liberation Day.'
New retail data from investing platform eToro, who asked 10,000 retail investors across 14 countries, including 1,000 from Australia showed a sharp trend away from America.
According to eToro's data the downturn in enthusiasm for US markets reflects broader economic uncertainty, with 37 per cent of Aussie investors citing the global economy as the biggest threat to their investments – the highest figure recorded since Q2 2022.
Inflation follows as the second biggest concern at 17 per cent.
Instead of investing abroad, local investors are increasing their exposure to Australian markets.
eToro managing director Robert Francis told NewsWire a combination of US policies and high valuations have retail investors sceptical of investing in the world's largest market going forward.
'People are beginning to realise the US exceptionalism isn't what it was a year or two ago with the inauguration of Trump has meant a lot of uncertainty,' he said.
Rayeiris Maduro Rondon, an investor based in Sydney after relocating from Venezuela told NewsWire it is her opinion that the days of the US exceptionalism has 'paused' as she shifts to Europe and China.
'I view this more as a period of recalibration rather than decline,' she said.
'Historically, when markets trade at elevated valuations for extended periods, investors begin to see high multiples as 'the normality' and price in unrealistic growth expectations.
'That's where the U.S. stands today.'
While she still holds some US investments on a 'reasonable valuation,' she said there are better opportunities abroad.
'In Europe and Asia, I'm finding businesses with higher returns on capital and strong
cash flows trading at deeply discounted valuations, making them far more attractive from a
risk-adjusted perspective,' she said.
Alert not alarmed
Australian investors are split on what the current market volatility means for them.
eToro's survey data showed 35 per cent of Aussies are more vigilant about their portfolio while a further 28 per cent are feeling anxious.
On the flipside, 24 per cent are actually hopeful or excited about the large market swings.
This optimism extends to investing strategies, with over a quarter of Aussie retail investors seeing a decline of 10 per cent or less as an opportunity to buy the dip.
eToro's market analyst Josh Gilbert said investors are alert but not all of them are alarmed.
'Many see recent market dips as buying opportunities, which signals a level of confidence in long-term market resilience, he said.
'The risk of being out of the market altogether is something savvy investors are acutely aware of.
'The recent rebound in global equities since April has reinforced that view, even in uncertain times.'
It has been a volatile ride for investors since Mr Trump took office for global markets initially rallying before hitting a bear market on April 2, with the announcement of Liberation Day.
The wide-ranging tariffs were touted as Liberation Day for the US, with Mr Trump arguing it would level out the playing field.
In a list of countries, Australia was 21st with a 10 per cent tariff on all goods imported into the US.
The ASX slumped 11.4 per cent in the five days following 'Liberation Day', while the US S & P 500 fell around 12 per cent while the Dow Jones dropped 11 per cent.
In both the Australia and the US shares quickly recovered after Mr Trump announced a temporary pause on his tariff policies.
Mr Francis said this was a dramatic turnaround in investor confidence with the market initially rallying when Mr Trump returned to office.
'The whole market was buoyant with Trump's inauguration,' he said.
'I mean, we all thought investors, market commentators, all thought that we were going to see a continued bullish trend in the market.
'But given what we're seeing now around trade conflicts, tariffs that are being implemented, this is kind of, where is this going to go?
'All of this means that there's a level of uncertainty right now that doesn't bring confidence in investing in the US'.
Some still move to safe assets
Commodities have also been a favourite of Australian investors as they look to protect their positions.
According to eToro's results, fears mount over a weaker US dollar and persistent inflation, Aussie retail investors are repositioning their portfolios, with nearly half of respondents having adjusted allocations or planning to.
Mr Gilbert said 60 per cent of respondents said they expect gold prices to increase in the next 6–12 months, which reinforces its traditional role as an inflation hedge.
'Interestingly, we've seen Bitcoin's growing status among younger investors as a similar hedge.
'Out of local retail investors who are adjusting their portfolios based on a weaker USD, 27 per cent of Gen Z respondents said they will buy more crypto, the highest out of all generations. Indeed, 52 per cent of local Gen Z investors already hold crypto.'
