Wall Street faces a new risk: European investors are boycotting American assets.

In recent years, foreign investors have played a key role in driving the repeated highs of the US stock market, especially European investors, who have been crazily buying American stocks. However, Wall Street is concerned that as tensions between the US and Europe intensify with President Trump's second term in office, one of the largest buyers of US stocks may exit the market. In fact, some signs indicate that this situation has already begun. Vincent Mortier, Chief Investment Officer of Amundi SA, Europe's largest asset management company with assets under management of 2.3 trillion euros (about 2.7 trillion US dollars), stated, "We see more and more clients wishing to reduce their dependence on US assets. This trend started in April 2025, and has accelerated this week." Mortier pointed out that any form of "decoupling" will ultimately be a long and complex process, and clients need to reconsider how to deviate from major benchmarks and hedge against US dollar risks. Currently, European investors hold about $10.4 trillion in US stock assets, with more than half coming from the eight countries that Trump previously threatened to impose tariffs on. Last week, Trump threatened to impose tariffs on eight European countries that support Greenland, but withdrew the tariff proposal during his attendance at the Davos Forum this week. These eight countries are Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland. Hugo Ste-Marie, Portfolio and Quantitative Strategist at Scotiabank, wrote in a report that in terms of proportion, European investors hold 49% of all foreign investors' holdings in US stocks, a volume sufficient to constitute substantial market risks. He said, "If the trend of diversified asset allocation accelerates, in the long run, it may put pressure on US stocks, US bonds, and the US dollar." It should be made clear that Europe is unlikely to coordinate the selling of US assets and may not be willing to do so. For Wall Street, the real threat does not come from coordinated measures at the government level. However, with Trump's continued threats and derogatory remarks from London to Berlin to Madrid, more and more asset managers are receiving inquiries from clients asking how to at least reduce their exposure to US assets. For European investors, selling US stocks would mean a major shift. According to data released by the Federal Reserve on January 9, as of September of last year, European investors' holdings of US stocks have increased by 91% over the past three years, adding about $4.9 trillion, including both continued purchases and contributions from asset price increases. Since the US government shutdown, more recent data has not been released. The SISA Pension Fund in Greenland manages assets of about 7 billion Danish Kroner (about $1.1 billion), of which about 50% is invested in the US, mainly in stocks, and its board has begun discussions on whether to reduce holdings. So far, although some pension funds, including AkademikerPension in Denmark, are withdrawing from US bonds, actual selling of US stocks remains limited. Although the "European buyer boycott" currently poses limited direct threats to US stocks, it undoubtedly adds a new risk factor to the US stock market, which is already at historical highs. Mathieu Racheter, Head of Stock Strategy at Julius Baer & Co., said, "In the current environment, you definitely don't want to be fully exposed to US stocks or US assets, especially you shouldn't be heavily weighted in US dollars." In fact, there is precedent for selling US assets due to dissatisfaction with Trump's threats. Last year, after Trump said he would make Canada the "51st state" of the US through "economic means," pension fund management institutions in Canada were asked to reduce their allocation to US stocks. At this week's Davos Forum, Canadian Prime Minister Justin Trudeau also said that countries that have relied on financial integration with the US in the past need to rethink this relationship, as Trump has weaponized this interdependence. Sebastien Page, Chief Investment Officer at T. Rowe Price, pointed out, "If you ask an economist what the conclusion about tariffs is in textbooks, it is that it will be more difficult for the exporting country. But the current financial markets are showing the opposite situation - tariffs are actually stimulating domestic investment and pushing for diversified trade partners." Nikolaos Panigirtzoglou, a strategist at JPMorgan, pointed out in a report on Wednesday that as of now, daily fund flow data for ETFs shows that demand from foreign investors for US stock funds has not changed significantly. However, this situation may change in the coming months. Benjamin Melman, Chief Investment Officer at Edmond de Rothschild Asset Management, stated, "Looking forward, one cannot rule out a reshuffling of the weight of the US in global asset allocation." Lars Christensen, CEO and Head of Analysis at financial consulting firm Paice, pointed out that the root of the problem is that the US seems to be abandoning the rules-based international order it has supported in the past, which means that investors may no longer fully trust the US dollar or US assets in the future. Christensen wrote on the social media platform X, "This is not a question of Europe confronting the US, but of how to be cautious in investment - how to reduce risks." This article is reprinted from Cai Lianshe, GMTEight editor: Chen Yufeng.