A striking feature of international capital flows during the past year was the dominant position of the United States as a recipient of flows, according to a report by the International Monetary Fund (IMF).
In 2000, the U.S. attracted 64% of world net capital exports, compared with 60% in 1999 and an average of about 35% during the period 1992-97. Net inflows to the U.S. exceeded US$400 billion, including a record level of foreign portfolio investment that could have nearly financed the U.S. current account deficit on its own. As in previous years, overseas investors (particularly in Europe) bought large quantities of U.S. equities and corporate bonds and cut back on purchases of U.S. treasury securities. Gross foreign purchases of U.S. equities were particularly strong, rising to US$3,600 billion — a sixfold increase since 1996. This sustained international appetite for private U.S. assets was maintained despite the deterioration in the U.S. economy and financial markets.
There was a net international capital outflow from Europe, as euro-area investors increased their net purchases of foreign portfolio assets, particularly equities. At the same time, foreign investors sold significant amounts of European shares received through cross- border mergers and acquisitions.
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