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Public Divided as to Effect of Foreign Investing on U.S. Economy; Most investors do not plan to make changes in foreign, domestic investments going forward.

Byline: Jeffrey M. Jones

Synopsis: Americans are divided as to whether investing in foreign stocks is good or bad for the U.S. economy. Even though overseas investments have posted strong returns in recent years, a majority of American investors say they have not given much or any thought to investing in foreign stocks. U.S. investors largely plan to stand pat with their investment choices, and not to increase or decrease their investments in foreign or domestic stocks.

PRINCETON, NJ -- In recent years, stocks of overseas companies have posted strong returns for U.S. investors. That U.S. markets have seen declines in the past few weeks in response to dips in overseas stock markets underscores the extent to which international markets are tied together. A recent USA Today/Gallup poll asked Americans about their attitudes toward investing in foreign stocks and their plans for doing so in the future.

These results suggest no consensus as to whether Americans' foreign investments are a net plus or net minus for the U.S. economy. Also, the vast majority of American investors who own foreign stocks plan to stand pat with these investments, suggesting no mass exodus from foreign stocks following the recent hiccups in the stock market.

The March 2-4 poll finds that, overall, the public is divided in its views of the effect that American investing in foreign stocks has on the U.S. economy. Thirty-two percent say it is good for the economy, with an equal percentage saying it is bad, and 24% believing it does not have much of an effect. (The remaining 12% do not have an opinion.)

Stockowners are more likely to see the effects as beneficial (37%) rather than harmful (27%). A majority of Americans who personally own foreign stocks think foreign investing is good for the U.S. economy.

The typical stockowner has not spent a lot of time considering foreign investments. Just 31% of investors say they have given "a great deal" or "moderate amount" of thought to investing in foreign stocks. A greater percentage of investors, 36%, have not considered foreign investing at all.

Among investors who currently do not own foreign stock, only 13% have given much thought to acquiring some, while 53% have not considered it at all.

Thirty-six percent of American stockowners say they currently have money invested in foreign stocks. That translates into roughly one in five U.S. adults.

When asked to look ahead, the vast majority of investors, 72%, say they will make no change to the amount they invest in foreign stocks. Equal percentages say they will increase (12%) or decrease their foreign investments (12%). Those who are currently invested in foreign stocks are more likely to say they will increase (24%) than decrease (7%) their investments in this area, but the majority (67%) is still not planning any changes.

Investors are much more likely to say they will increase their investments in domestic stocks -- 44% say they will do so. The plurality of investors, 49%, intend to stick with their current investment decisions, while only 6% plan to decrease their investment in U.S. stocks. These numbers are similar among those who are invested in foreign stocks and those who are not.

Thus, while U.S. stockowners plan no significant departure from their current foreign investments, they are nearly as likely to increase the amount they invest in domestic stocks as to stand pat.

Survey Methods

These results are based on telephone interviews with a randomly selected national sample of 1,010 adults, aged 18 and older, conducted March 2-4, 2007. For results based on this sample, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is [+ or -]3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For the results based on 668 stockowners, the maximum margin of sampling error is [+ or -]4 percentage points.
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Article Details
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Author:Jones, Jeffrey M.
Publication:Gallup Poll News Service
Article Type:Survey
Geographic Code:1USA
Date:Mar 19, 2007
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