European equities see first outflows in 17 weeks

Equity and high-yield bond funds saw their biggest weekly outflows this year in the week before the UK election.

Global equity funds saw $17.2 billion in outflows in the week that ended on May 6, when $2.6 billion left global high-yield bond funds.

European equity funds saw their first outflows in 17 weeks, worth $1.5 billion, according to Bank of America Merrill Lynch research.

European Equities Outflows

European equities saw their first outflows in 17 weeks. Source: BofA Merrill Lynch

Ever since it became clear that the European Central Bank will buy government bonds, investors had been piling into European stocks.

In fact, quantitative easing by the ECB was considered the only certain investment theme for the second quarter.

But investors were spooked lately by the ongoing dispute with Greece about its unwillingness to go on with reforms agreed by the previous government as part of its bailout, despite better economic news elsewhere in the eurozone.

The length of the bull market run has caught many investors by surprise and fears mount that a correction in equities could be near.

The S&P 500 bull run is nearing the level of previous such runs, according to calculations by Bank of America Merrill Lynch.

It is no surprise, therefore, that US stocks again saw the worst of the capital retreat: they suffered outflows in 11 out of the past 12 weeks, with $15.8 billion leaving last week.

Emerging markets equities saw outflows in nine of the past 10 weeks, with $200 million leaving last week.

Japanese equities have been in a sweet spot, with 11 straight weeks of inflows. Japanese stocks received another $1.2 billion in the week that ended on May 6.

In fixed income, high-yield bond funds saw their largest outflows this year, of $2.6 billion, while investment grade debt funds clocked their 72nd straight week of inflows, with another $2.9 billion going in.

Emerging market debt funds saw their seventh week in a row of inflows, with $600 million invested in the asset class.

1 thought on “European equities see first outflows in 17 weeks

  1. Pingback: European equities' tantrum is temporary: strategist

Comments are closed.