Investors pulled money out of stocks at a record pace in the days following major central banks made it clear they were unrelenting in their fight once morest inflation. A fitting end to the worst year for global stock markets since the financial crisis.
About $42 billion (regarding 5.57 trillion yen) outflowed from stock funds in the week ending on the 21st, the largest ever. Earlier this week, the Federal Open Market Committee (FOMC) gave a hawkish stance on its policy outlook for next year, followed later in the week by the European Central Bank (ECB) and the Bank of Japan. Year-end trends also contributed to the selling, strategists said.
The outflow was attributed to Bank of America (BofA), Citigroup and Barclays, all citing data from EPFR Global. Bond funds and money market funds also saw net outflows during the week, the three banks said.
Equities still net inflows of $166.5 billion for the full year. 2023 might be even lower, suggesting that investors haven’t completely surrendered yet. Fixed income funds net outflows of $257 billion for the full year. BofA strategist Michael Hartnett expects bonds to outperform equities in the first half of next year.
60/40 to revive next year-Bonds in the first half, equities in the second half, BofA predicts
“Many of the problems in 2022 are unresolved and investors should be prepared for a volatile new year,” Barclays strategist Emmanuel Coe wrote in a note. “The inflation vs. recession debate, the outlook for corporate earnings, the re-opening of the Chinese economy and the conflict in Ukraine will continue to attract market attention,” he said.
Original title:Record Weekly Outflows Cap Worst Year for Equities Since 2008(excerpt)
