Wall Street Losing Its Global Appeal? Tariff Rally Fails To Lure Back Asian Traders

Asian traders are steering clear of the U.S. markets amid their rebound from the tariff-induced setback seen in April. 

A Bloomberg report, citing official data, said Japanese traders became net sellers of exchange-traded funds (ETFs). South Korean traders were net sellers of U.S. stocks for the first time since before Trump assumed office for a second term in January.

Data from a Singaporean brokerage showed local trades buying U.S. stocks fell by about 25% month-over-month in May.

The development comes as the U.S. market is recovering, inching toward its all-time high. The S & P 500 Index - a broader market measure - rebounded back above the 6,000 mark on Friday following a forecast-beating monthly non-farm payrolls report.

The index remains below its all-time highs of 6,147.43, which it reached on Feb. 19.

After President Donald Trump announced his reciprocal tariffs in early April, the weakness in the market intensified, pushing the S & P 500 Index to a low of 4,835.04 on April 7.

Since then, the market has resiliently fought back.

That said, U.S. stocks have grossly underperformed their global counterparts. The Vanguard Total International Stock Index Fund ETF Shares (VXUS), an ETF that tracks a benchmark index comprising global stocks, excluding the U.S., is up 16% year-to-date compared to the S & P 500's 2.1% gain.

Interactive Brokers Chief Strategist Steve Sosnick reportedly told Bloomberg that Asian traders were aggressive at the lows, but the buying has tapered since then.

This was confirmed by anecdotal evidence. A South Korean retail trader reportedly said he snapped up shares of Tesla and other tech heavyweights in April and has finished accumulating. He added that he would remain in hold mode for now. 

That said, the appeal of U.S. stocks as safe havens has not lost out on Asian investors, as they view the pullback as temporary.

Nam Yong Soo, head of the ETF management division at Korea Investment Management Co., reportedly said,“Most investors in South Korea have steady belief in the US stocks.”

Most who are on the sidelines are watching Trump's next moves.“Now that the market is back to where it was, I'm not pouring more money than usual into the market. But if Trump announces anything that tanks the market again, I'll buy more,” a  Singapore-based investor who splurged into ETFs that track growth stocks and U.S. indices during the April dip said.

The Invesco QQQ Trust (QQQ) ETF and the SPDR S & P 500 ETF (SPY) are up 4% and 2.6%, respectively, for the year.

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