Trump's return to the White House once ignited global investors' enthusiasm for U.S. assets, but this enthusiasm is rapidly reversing. Global funds are systematically avoiding the U.S. market and instead flowing into European and Asian assets, marking a profound global portfolio rebalancing that is genuinely occurring.
On February 25, Katie Martin, a columnist for the Financial Times, pointed out that the S&amp;P 500 index in the U.S. has slightly declined this year, while the global stock index excluding the U.S. has risen by as much as 9%, far exceeding the approximately 2% increase of the MSCI global index that includes the U.S. This contrast suggests that this year is likely to become the worst year for U.S. stocks relative to performance since 1995.
U.S. tech stocks are under pressure, policy uncertainty continues to brew, and the economic growth rate has slowed to a moderate annualized level of 1.4%, all of which are collectively shaking the core appeal of U.S. assets. Meanwhile, expectations for fiscal expansion in Europe are heating up, and signs of a turnaround in the German economy are making European assets the biggest beneficiaries of this round of capital reallocation.
<h2>Enthusiasm Remains, Direction Has Changed</h2>
The article notes that the current overall enthusiasm of fund managers for risk assets is roughly on par with the expectations following Trump's victory at the end of 2024; investors are not falling into pessimism, but rather the direction of their enthusiasm has fundamentally shifted.
By the end of 2024, market excitement was focused on the new U.S. government's deregulation and fiscal stimulus expectations, with the dollar strengthening and U.S. stocks leading the way, as the U.S. was seen as the engine that would &#34;draw&#34; growth momentum away from other developed economies. However, entering the second year of Trump's second term, this narrative has quietly collapsed.
Since the end of December last year, U.S. stocks have been oscillating within an unusually narrow range, neither experiencing significant declines nor effective increases. Notably, even when Trump's power was limited (for example, he lost a tariff lawsuit last week), the U.S. market failed to rebound, indicating that the market's indifference is not solely due to policy concerns, but rather a deeper shift in capital flows.
<h2>Europe Welcomes the &#34;Sleeping Beauty&#34; Awakening Moment</h2>
According to Bank of America Merrill Lynch's regular survey of investors, the current overweight ratio of global investors in Eurozone assets has reached a historical record. In a specialized survey in Europe, more than one-third of respondents indicated they hold a higher-than-benchmark position in EU stocks, compared to only 9% three months ago. Meanwhile, a net 22% of respondents indicated a lower-than-benchmark allocation to U.S. stocks, while this ratio was only 6% by the end of 2025.
The article mentions that French asset management company Carmignac likens this phenomenon to the awakening of &#34;Sleeping Beauty,&#34; believing that structural and cyclical factors are jointly driving renewed interest in European assets. A large amount of capital is flowing into European stock funds, as investors seek to diversify the concentrated risks of tech stocks and avoid the spillover effects of domestic political risks in the U.S.
The advancement of Germany's large-scale fiscal spending plan has rekindled market confidence in its economic outlook, and while Eurozone business survey data has not been impressive, it is showing signs of improvement.
<h2>Tech Stocks' Slowdown Intensifies Pressure on U.S. Assets</h2>
Analysts state that the core pillar supporting the investment myth of the past decade in the U.S.—the outperformance of tech stocks—is now wavering. **While it remains uncertain whether the recent pullback of AI-related stocks is a short-term fluctuation or a trend reversal, the market unease triggered by AI's impact on the tech industry is accelerating the shift of capital from the U.S. to Europe
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At the same time, U.S. economic data also shows signs of fatigue. The latest annualized growth rate is only 1.4%, far below the previously strong market expectations, and is instead close to Europe's sluggish pace. The Financial Times commented that the triple pressures of a slowdown in tech stocks, economic cooling, and political turmoil have subjected the attractiveness of U.S. assets to multiple attacks.

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Analysis suggests that the enthusiasm for U.S. assets ignited by Trump's return to the White House is rapidly reversing. Global funds are systematically shifting from the U.S. to Europe and Asia, leading to a profound rebalancing of investment portfolios. This year, U.S. stocks are expected to post their worst relative performance since 1995, with the S&P slightly declining while global stock indices excluding the U.S. surged by 9%. The triple pressures of a slowdown in tech stocks, economic cooling, and political turmoil have collectively undermined the attractiveness of U.S. assets, with Europe emerging as the biggest beneficiary of this capital reallocation

- Global investors are rapidly shifting away from U.S. markets towards European and Asian assets, marking a significant rebalancing of investment portfolios.  
- According to the Financial Times, the S&P 500 has slightly declined this year, while global stocks excluding the U.S. have risen by 9%, indicating a potential worst performance for U.S. stocks since 1995.  
- With pressures on U.S. tech stocks and a slowdown in economic growth, Europe has emerged as the main beneficiary of this capital reallocation, with a historical high in investors' allocation towards Eurozone assets.

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