Stocks

Bears return as Eurpoean stocks see second worst exit on record

Bloomberg London | Updated on February 15, 2019 Published on February 15, 2019

The regions equity funds experienced their second-largest outflows on record in the week through February 13. File Photo   -  Reuters

So much for last weeks optimism that investors were finally coming back to European stocks. The regions equity funds experienced their second-largest outflows on record in the week through February 13, bleeding $5.9 billion, according to Bank of America Merrill Lynchs note, which cited EPFR Global data.

Investors continued fleeing developed-market equity funds, including those dedicated to US and Japan, whereas emerging-market stock funds enjoyed inflows for the 19th of the past 20 weeks. Overall, investors rotated into fixed income assets, with investment-grade bond fund inflows leading the pack, while mortgage-backed security funds saw record high inflows.

Buyers strike in equities continues, BofAML strategists including Michael Hartnett wrote in a note, saying investors are seeking yields in fixed income.

Market participants have been shunning equities, with global stock allocations in February falling to the lowest level since September 2016, signaling a deep lack of conviction in the sustainability of the new-year rebound. Europe is especially vulnerable to investor worries because of messy politics spanning from Brexit and Italy, as well as slowing growth rates.

Although many traders have been staying on the sidelines, European and global equities have staged an impressive rally this year. Optimism soured on Thursday and markets fell as global economic growth concerns resurfaced and investors questioned the potential for progress on the US-China trade dispute.

Published on February 15, 2019
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