Bank of America Merrill Lynch (BAML), the US investment bank, said on Friday that funds were flowing out of stock and bond funds at a time when global stock markets had steadily achieved their best weekly performance in more than two years.
Although the overall outflow of global equity funds is relatively small, at $1.4 billion, the outflows of Japanese, European and emerging market equity funds are about $3 billion respectively, indicating growing concerns about the global economic outlook.
The performance of bond funds is also bad. Investment-grade and High-yielding bond funds are experiencing massive outflows, even as global risky assets rebound as hopes of possible trade agreements between the United States and China increase.
MSCI's emerging market index closed 2.6% higher on Friday. Germany's DAX index, which has a large export stake, jumped 1.5% in early Friday to its best opening performance since July, closing up 0.44%.
Based on an analysis of weekly data from fund tracker EPFR Global as of Wednesday, Bank of America Merrill Lynch data show that 87% of the global market is still in an "extremely oversold" region, slightly lower than 93% in the previous week.
From an investor's point of view, it is worrying that the correlation between the US stock market and the bond market is further strengthened, suggesting that the global market may experience a period of intense turbulence.

<>BAML says funds continue to flow out of equity funds

 

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