LONDON, Oct 30 (Reuters) - Emerging market stocks attracted $1.3 billion in the week to Wednesday, the biggest inflows for 16 weeks, Bank of America Merrill Lynch said on Friday, as investors bet on more monetary stimulus and a U.S. interest rate rise delay.
The numbers do not capture investor flows following the Federal Reserve’s two-day meeting which concluded on Wednesday, at which it left the door open for a rate rise in December.
Market sentiment has been bullish in October, with global stocks up 8 percent, their largest monthly gain in four years.
“Investors are risk on,” BAML said, noting that overall equity inflows topped $14.6 billion, the largest in six weeks.
European equities enjoyed their largest inflows in eight weeks, attracting $3.2 billion, after European Central Bank President Mario Draghi signalled further stimulus measures could be on the cards.
European stocks rallied more than 8 percent in October, on course for their biggest monthly rise in more than six years.
Emerging markets also rebounded, with the benchmark emerging equities index on track to post gains of over 7 percent for October, its best month since April.
In a separate note, Boston-based fund flows research house EPFR Global said the bulk of the new money for emerging markets had flowed into diversified global equity funds. Among countries, China, Indonesia, Turkey and Argentina equity funds gained the most since the start of October, it said.
“The strong performance by Argentina equity funds is rooted in hopes of political change, with a run-off election next month to decide who succeeds the strongly interventionist President Christina Fernandez Kirchner,” EPFR Global said.
The change in sentiment did not extend to emerging market debt funds, which saw some $400 million in net outflows.
Instead, high yield bonds remained in favour, attracting $3.9 billion, the largest inflows in eight months, as investors searched for returns, BAML said.
At the same time, outflows from government and treasury bond funds topped $1.8 billion, the most in 17 weeks. (Reporting by Claire Milhench; Editing by Hugh Lawson)