The question of American exceptionalism still haunts analysts and market participants in the US, Europe, and Asia. Everyone is watching closely to see how the situation unfolds.

According to analysts at Nomura, the long-standing theme of US exceptionalism in equity markets is now “showing signs of fatigue.” They note that global investors are actively reallocating capital toward Europe and emerging markets.

High-frequency ETF data reveals a significant slowdown in inflows to US-focused offshore equity funds. Over the past 20 weeks, there has been a net outflow of $4.7 billion, marking a notable reversal after $160 billion in net inflows between mid-2023 and early 2025. Despite US equities reaching new highs, foreign investor interest seems to be waning.

In contrast, Europe-focused offshore ETFs have recorded $15 billion in net inflows over the past 21 weeks. Similarly, emerging market ETFs have seen $13.6 billion in inflows over the past 23 weeks.

Since late March 2025, India ETFs alone have attracted $1.8 billion. As for Taiwan and Japan, capital is primarily flowing in directly through equities rather than ETFs. Asian markets currently show a mixed picture. South Korea’s offshore ETFs have seen $1.4 billion in inflows over the past six weeks, driven by interest in AI and optimism around corporate governance reforms.

Talks of the decline in US exceptionalism — a narrative that has long shaped global portfolio allocation — have been gaining momentum since the beginning of 2025. This also coincides with a weaker US dollar and diminishing demand for US Treasuries. In this context, foreign investors are increasingly seeking more stable stores of value, Nomura emphasizes.