Bulls and the bears are fighting it out

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