Investors pulled money out of stocks at a record pace in the days after major central banks made it clear they were relentless in their fight against inflation. A fitting end to the worst year for global equity markets since the financial crisis.
About $42 billion (about 5.57 trillion yen) outflowed equity funds in the week ending 21, the largest ever. Earlier this week, the Federal Open Market Committee (FOMC) issued 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 sale, 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.
The shares still post net inflows of $166.5 billion for the full year. 2023 could be even lower, suggesting investors haven’t fully given up just 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 relaunch next year-Bonds in H1, equities in second, BofA forecast
“Many of the issues in 2022 are unresolved and investors should be prepared for a volatile new year,” Barclays strategist Emmanuel Coe wrote in a note. “The debate between inflation and recession, the outlook for corporate earnings, the reopening of the Chinese economy and the conflict in Ukraine will continue to attract market attention,” he said.
Original title:Record weekly outflows cap the worst year for stocks since 2008(extract)
