The latest cross-border capital flow report released by the Institute of International Finance (IIF) shows that in July 2026, foreign investors net purchased US stocks worth $120 billion, marking the ninth consecutive month of net inflows, with cumulative inflows in the first seven months surpassing the full year of 2025. At the same time, emerging market equity funds showed mild outflows. This data not only reflects global capital's risk preference but also directly confirms the unshakable position of US stocks in global asset allocation.
Economic Fundamentals: Global Strongest "Money Attraction"
Despite market concerns about economic slowdown, the US second quarter earnings season once again delivered impressive results. FactSet data shows that as of the end of July, more than 70% of S&P 500 index components had earnings per share exceeding market expectations. Among them, tech giants like NVIDIA and Microsoft, driven by AI capital expenditures and cloud computing demand, showed particularly outstanding profit growth, further consolidating the global leading position of US stock earnings. The profit certainty of blue-chip stocks remains the fundamental reason for global capital to bet on US stocks.
Shareholder Returns: Buybacks and Dividends "Supporting the Bottom"
US listed companies continue to return to shareholders through large-scale buybacks and dividends. According to incomplete statistics, in the first half of 2026, the total buyback amount of S&P 500 companies exceeded $900 billion, a record high for the same period. Companies represented by Apple and Google not only have abundant cash flow but also effectively increase earnings per share through continuous buybacks. The stable shareholder return mechanism not only supports stock prices but also provides a safety cushion for investors, which is an important institutional foundation for the long-term slow bull market of US stocks.
US Dollar Assets: Global Capital Safe Haven
Against the backdrop of rising global geopolitical uncertainty and intensifying debt risks in some emerging economies, US dollar assets are still regarded as the most reliable safe haven. The Fed maintained interest rates unchanged at its July meeting, but the meeting minutes showed a possible shift toward easing in the second half, which further enhanced the attractiveness of US stocks to overseas capital. The appreciation of the US dollar index also amplifies the actual returns for foreign investors—this is particularly beneficial for large institutions with low hedging costs.
Global Allocation: US Stocks "Cannot Be Replaced"
Although some emerging markets have more attractive valuations, issues such as liquidity, institutional transparency, and capital restrictions limit foreign participation. In contrast, the US stock market has great depth and rich industry structure, especially in technology, healthcare, and consumption, it has the world's best companies. According to statistics, among the top 10 global market cap companies, 7 are US companies. For global sovereign funds and pension funds, US stocks are the first choice for building core portfolios, so capital inflows have long-term and continuous characteristics. From the perspective of capital flow structure, global capital's preference for US individual stocks also shows significant differentiation: technology, healthcare, and industrial sectors are most favored by foreign capital, while defensive sectors such as utilities and consumer staples are relatively flat, reflecting that foreign capital is willing to pay a premium for high growth and high quality, and industry selection is also crucial.
How Chinese Investors Participate?
For investors in mainland China, channels to participate in US stocks mainly include QDII funds, US stock ETFs in Hong Kong Stock Connect (such as S&P 500 ETF), and indirect allocation through the Qualified Domestic Institutional Investor (QDII) system. In addition, you can also pay attention to American Depositary Receipts (ADRs) listed through Shanghai-Hong Kong Stock Connect/Shenzhen-Hong Kong Stock Connect. It is worth noting that in recent years, the scale of US stock index funds issued by domestic public funds has grown rapidly, providing a low-threshold way for ordinary investors to participate. Investors should choose index regular investment or actively managed funds according to their own risk preferences, and pay attention to exchange rate risks.
Risk Warning: Not a Guaranteed Profit
Investing in US stocks is not without risks. Fluctuations in the US dollar exchange rate, unexpected Fed tightening, tech stock valuation bubbles, and the US stock market's excessive sensitivity to economic data can all cause short-term volatility. For example, in the first half of 2026, the market experienced violent shocks due to repeated inflation data. In addition, the US stock market is highly institutionalized, and in extreme situations, liquidity may dry up instantly, which is particularly unfavorable for high-frequency traders and leveraged investors. For ordinary investors, they also need to consider cross-border tax costs and other issues. It is recommended that investors adopt strategies such as regular investment or industry diversification based on their own risk tolerance, gradually build positions, and avoid chasing gains and selling at losses.
Conclusion: Capital Votes with Feet, Allocation Value Still Significant
Net inflows of global capital for nine consecutive months are the most direct vote of confidence in the investment value of US stocks. Against the backdrop of global asset scarcity, US stocks still occupy an indispensable core position in global capital allocation with corporate earnings, shareholder returns, and institutional advantages. Understanding these deep-seated logics will help investors maintain confidence during volatility and rationally grasp long-term allocation windows.
