Heavy equity, emerging market inflows signal return to "risk-on" -BAML

viernes 30 de septiembre de 2016 08:07 GYT

By Sujata Rao

LONDON, Sept 30 (Reuters) - Global investors returned decisively to "risk-on" mode in the past week, Bank of America Merrill Lynch (BAML) said on Friday, noting multi-billion dollar inflows into equity, corporate bond and emerging market funds.

Its data, which covers flows through Wednesday, does not appear to capture the broader market stress relating to Deutsche Bank, whose shares have slumped to record lows following the imposition of a potential $14 billion fine from U.S. regulators, sparking contagion fears across the European banking system.

Equity fund inflows of $5.6 billion were the largest in seven weeks, BAML said, noting that $9.9 billion flows to exchange-traded funds had masked $4.2 billion that fled mutual funds.

The prior week had seen $7.4 billion flee world equity funds as investors had turned cautious before Sept 20-21 meetings of the U.S. Federal Reserve and Bank of Japan.

But with those meetings out of the way, Japanese and U.S. equities received $2.2 billion and $4.2 billion, respectively, over the week, though Europe lost another $1.9 billion for a record 34-week outflow streak.

BAML attributed the improved sentiment to rock-bottom volatility as the Fed indicated it is in no rush to raise interest rates, and Democrat Hillary Clinton was seen to have won the first debate between the two presidential candidates.

Japan's central bank too affirmed its commitment to continuing its asset purchase programme as long as needed, calming jittery markets.

Bond fund inflows hit a seven-week high of $9.3 billion, though government debt funds lost $1 billion. Money flowed instead to high-yield bonds which took in $2.9 billion, the largest in 11 weeks, while emerging debt received $2.4 billion.   Continuación...