Bulls and the bears are fight­ing it out

The Star Early Edition - - BUSINESS REPORT -

IN­VESTORS pulled $7.7 bil­lion (R99bn) from US equities, the big­gest out­flows in five weeks, data from Bank of Amer­ica Mer­rill Lynch (BAML) showed on Fri­day, re­vers­ing the pre­vi­ous week’s bumper in­flows as bears bat­tled with the bulls. Glob­ally equities at­tracted just $500 mil­lion in the week to Wed­nes­day as the heavy out­flows from US stocks off­set $2.1bn of in­flows to emerg­ing markets and $1.1bn of in­flows to Euro­pean stocks. Bonds at­tracted $5bn glob­ally, with $3.3bn in­jected into in­vest­ment-grade bonds, $1.1bn into high yield and $1.9bn into emerg­ing-mar­ket debt funds. While BAML said “ir­ra­tional sen­ti­ment” was con­fined to tech stocks, cor­po­rate bonds and emerg­ing debt, it is stick­ing with its view that an Icarus-style climb will be fol­lowed by a Humpty Dumpty-like fall in the au­tumn. The S&P 500 climbed to record highs last week, with tech stocks re­bound­ing from re­cent de­clines, helped by Ama­zon buy­ing up­scale gro­cer Whole Foods Mar­ket. In­flows to tech funds in 2017 are grow­ing at their fastest an­nu­alised rate in 15 years – equiv­a­lent to 21 per­cent of as­sets un­der man­age­ment, the bank’s an­a­lysts noted. But some in­vestors are get­ting cold feet, with $200m pulled from tech funds in the week to Wed­nes­day, the first tech out­flows in 16 weeks. BAML cited sev­eral signs of Wall Street ex­cess, not least the fact that Face­book’s mar­ket cap now ex­ceeds the mar­ket cap of MSCI In­dia. – Reuters

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