Investors Pulled Billions From Stocks

April 22, 2016

Investors pull about $7.3 billion from stocks, making it the largest outflows in nine ahead of incurring money into corporate and emerging market debt, according to Bank of America Merrill Lynch on Friday.

The equity redemptions were fueled by outflows from shares of U.S. worth $4.2 billion, and from Japan’s $2.6 billion. It is considered as the largest outflows of the equity funds of Japan since November 2014 and has extended the longest outflow line since February 2012.  

European equities struggled on an outflow of $2.1 billion, and is currently in their 11th straight week of redemptions, suggesting its longest outflow streak six years ago, said BAML. Meanwhile, it has also used data retrieved from fund flows research house EPFR Global.

Ahead of the outflows, European equities increased about 3.3 percent for this month, while shares of Japan rallied 4.9 percent and U.S. stocks jumping 1.5 percent.

However, as the trend of the previous week remained steady, the preferred fixed income of investors, surges bond exposure by about $4.9 billion. The higher yields witnessed on corporate credit were sought in the likes of safe-haven government bonds and treasuries. Meanwhile, over $2.9 billion were attracted by investment grade credit, emerging market debt, which settled at $1.3 billion and high-yield bond funds about $800 million.   

BAML mentioned that $9.2 billion were attracted by emerging debt funds over nine consecutive weeks of inflows, but it was followed by a huge redemptions of $102 billion over the past three years.

The bank also stated that its bull and bear index, a measurement of market sentiment, settled at a 10-month high hitting 4.9, suggesting in a neutral territory. It appears that it has sharply improved from the months of February and March lows of 0.1, suggesting a strong bearishness in the market.

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