-Almost 2/3 of world stocks in bear territory but $8.5 bln flows into funds-BAML
(Repeats to add PIX)
By Sujata Rao
LONDON, Oct 26 (Reuters) - With 63 percent of MSCI's global
index now in a "bear" market, world stocks look oversold but
global equity funds nevertheless attracted inflows of $8.5
billion over the past week, Bank of America Merrill Lynch said
World stocks are heading for their fifth straight week of
losses and look set for their worst month in around seven years
. The U.S. S&P500 is a whisker off losing all its
gains for the year amid fears that slowing world growth
and trade conflicts will erode company profits.
BAML data - based on analysis of numbers from Boston-based
flows tracker EPFR Global covering the week to Wednesday -
showed that after weeks of equity selling, 1,742 of 2,767 global
stocks had fallen 20 percent off peaks, putting them into a
so-called bear market.
In emerging markets, the figure was as high as 919 out of
1,150 stocks - 80 percent of the total - while of 1,899 New York
stocks, 1,164 or 61 percent, were in the "bear" bracket.
But emerging equity funds took in $2.6 billion, the highest
inflow in seven months, while Japanese funds received $5.3
U.S. shares too absorbed $1.8 billion but Europe has posted
outflows in 32 of the past 33 weeks.
BAML said despite big market falls recently and signs of
investor buying interest, it was too soon "to flip from bearish
"Big picture explanation - it's late-cycle and Fed is
tightening. Cyclical explanation - peak positioning, peak
profits, peak policy stimulus = peak prices in 2018," the bank's
But noting that 70 percent of world stocks had been in bear
territory in 2011, they said if the selloff turned out not to be
a harbinger of recession, it could signal an excellent entry
point in the coming weeks or months.
But pain continued to be felt on bond markets with a fifth
week of outflow, losing $7.2 billion. Investment-grade as well
as junk debt lost money, shedding $3.1 billion and $2.9 billion
respectively, while emerging bonds saw $1.1 billion outflows.
BAML noted that the annualised near-10 percent loss on U.S.
Treasuries and 4 percent on investment grade bonds would be the
third-largest since 1970.
(Reporting by Sujata Rao; editing by Marc Jones and David
First Published: 2018-10-26 13:07:35
Updated 2018-10-26 13:14:53
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