LONDON, Oct. 15 (Reuters) – Investments in equities slowed as emerging market debt and equity funds registered the biggest buyback in ten weeks, concerns over rising inflation pressures and slowing with China prompting investors to abandon popular deals, BofA said on Friday.
Investors invested $ 11.8 billion in stocks and $ 77 million in bonds, during the week to Wednesday, according to BofA’s weekly flow note based on EPFR data.
Corporate credit across all classes saw the money leave along with high yield debt and emerging market debt, with the largest outflows at $ 1.8 billion and $ 2.5 billion each.
“Bear case ends in pandemic, as do $ 30 trillion in emergency stimulus and more bearish positioning of Wall St reflects concerns about inflation and China,” said analysts led by Michael Hartnett, the bank’s chief investment strategist, in a memo recommending that clients “sell it”.
BofA analysts believe policymakers and politicians are now concerned that inflation could damage growth and approval ratings, leading to a widespread political shift from pro-growth policies to anti-inflationary policies.
The BofA Bull & Bear indicator, meanwhile, fell to 5.1 from 5.5, in the middle of the range as credit flows stagnate and the broader equities technical picture deteriorates.
Reporting by Saikat Chatterjee; Editing by Karin Strohecker
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