(Reuters) – Global equity funds suffered massive outflows in the week to May 3, hit by weak economic data and worries over a recession as investors were fretted about the likelihood of interest rates staying higher for an extended period.
According to Refinitiv Lipper data, global equity funds recorded a net $16.9 billion worth of outflows in the week to May 3, marking the biggest weekly outflow since March. 29.
The first quarter economic data painted a bleak outlook for the year, as U.S. economic growth slowed more than expected. At the same time, the German economy also stagnated due to declining consumption.
(GRAPHIC: Fund flows: Global equities, bonds and money markets – https://www.reuters.com/graphics/GLOBAL-FLOWS/GLOBAL-FLOWS/gdpzqmloqvw/chart.png)
In Asia, China’s factory activity dipped in April, suggesting the manufacturing sector is losing momentum amid a bumpy post-COVID economic recovery.
This week, the Fed raised interest rates by a quarter of a percentage point again, increasing consumer and company borrowing costs.
The U.S. and European equity funds booked $15.6 billion and $600 million worth of outflows during the week, while Asian funds drew a small inflow of $160 million.
Among sectors, investors pulled out money worth $563 million and $358 million from tech and financial sector funds, while they poured a net $463 million into consumer staples.
(GRAPHIC: Fund flows: Global equity sectors – https://www.reuters.com/graphics/GLOBAL-FLOWS/GLOBAL-FLOWS/lbpggleawpq/chart.png)
Meanwhile, investors continued to favour money market funds, which lured inflows worth $44.3 billion, higher than $41.7 billion in the previous week.
Global bond funds also secured $3.95 billion of inflows in a second week of net buying.
Investors purchased government and short- and medium-term bond funds of about $2 billion each but drew $910 million out of high-yield funds.
(GRAPHIC: Global bond fund flows in the week ended May 3 – https://www.reuters.com/graphics/GLOBAL-FUNDS/GLOBAL-FUNDS/akveqelmqvr/chart.png)
Among commodities, energy funds received $169 million in a second straight week of net buying, while precious metal funds drew a net $87 million worth of inflows.
Data for 23,973 emerging market funds showed investors received a net $1.35 billion worth of equity funds in their biggest weekly net buying since March 1 but exited a net $183 million worth of bond funds.
(GRAPHIC – Fund flows: EM equities and bonds – https://www.reuters.com/graphics/GLOBAL-FLOWS/GLOBAL-FLOWS/klvygnywlvg/chart.png)
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Louise Heavens)
