Investors pull money out of all but U.S. stocks, tech an "oasis"
* $5.1 bln into U.S. stocks
* $12.9 billion flows out of global equities
* Financials suffer biggest redemptions since Sept 2016
* Tech an "oasis" as inflows continue unabated
* Bull & Bear index hits two-year low
(Adds quotes, details)
By Helen Reid
LONDON, June 22 (Reuters) - The United States was the only
global region to enjoy investment inflows this week, with $5.1
billion pumped into U.S. stock funds while the same amount
flooded out of emerging markets, Bank of America Merrill Lynch
(BAML) strategists said on Friday.
Investors pulled $2.7 billion out of European equities and
$1.9 billion out of Japan in a broad withdrawal from assets
perceived as risky, which saw $12.9 billion flowing out of
global equities and $5.9 out of bond funds.
It was the seventh straight week of inflows for U.S.
equities, which have benefited from their heavy weighting in big
tech stocks and strong economic data.
The dollar's rise on this economic strength has bruised
emerging markets (EM), which had their biggest weekly outflows
since November 2016 as investors shed EM assets.
The risk-off moves sent BAML's "bull and bear" indicator - a
measure of investors' appetite for risk - down to 2.9, its
lowest since the Brexit vote two years ago and edging closer to
a contrarian "buy" signal.
Triggers for a drop to that level could include further
outflows from risk assets, the S&P 500 falling below 2,650
points, or weak June U.S. payroll figures, which may nudge the
Federal Reserve to cut its forecast for two more interest rate
hikes this year.
FINANCIALS FLOUNDER, TECH STAYS TERRIFIC
In a week of new highs for the tech-heavy Nasdaq, investors
kept buying tech stocks, putting the sector on course for a
record annualised inflow of $37 billion.
"Tech an oasis," said BAML strategists, adding the sector
seemed so far "immune to summer macro and market woes" and was
Analysts have been trying to explain the tech sector's
astonishing outperformance and resilience to concerns from trade
to monetary tightening.
Besides the conviction among many investors that the tech
revolution is a secular trend, the sector also has a relatively
light debt burden which makes it more resilient to rising
Meanwhile, investors shed financial stocks at a rate not
seen since September 2016.
Some $1.4 billion flowed out of financials as investors
priced in a negative impact from rising protectionism and
adjusted their interest rate expectations after more dovish than
expected comments from the European Central Bank.
'QUANTITATIVE TIGHTENING' DRIVES TRANSATLANTIC DIVERGENCE
The U.S. Treasury-Bund spread hit its widest since 1989 as a
result of the diverging outlooks for rates from the Fed and ECB
In credit, high-yield bond funds had their seventh
consecutive week of outflows, while investment-grade bonds had
their biggest outflows since December 2016. EM debt funds had
their 9th straight week of outflows, losing $1.7 billion.
BAML pinned these moves to the cycle the market is entering
as global central banks tackle the mammoth task of gradually
turning off the taps of post-crisis quantitative easing
The strategists noted "QE winners" including EM debt,
high-yield and investment-grade credit are suffering, while "QE
losers" such as volatility, cash, commodities and the U.S.
dollar are outperforming.
(Reporting by Helen Reid, Editing by Danilo Masoni and Mark
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