The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
UK equity outflows are on track for their worst year ever, with investors pulling $18 billion from the country’s stock funds so far in 2022, according to Bank of America Corp.
The figure eclipses prior years, and would mark a seventh straight year of UK equity outflows — every year since the 2016 Brexit referendum — according to EPFR Global data, cited by Bank of America strategists in a note.
The data underlines a tumultuous week for UK assets, with a collapse in the pound and a surge in borrowing costs spurred by concerns that a radical unfunded tax-cutting package by newly-elected Prime Minister Liz Truss will balloon the country’s debt and stoke inflation. The Bank of England was forced to intervene this week by buying long-dated UK government bonds and delaying planned gilt sales.
The crisis of confidence in the UK is also showing in the shrinking size of London’s market. The combined value of companies with a primary UK listing has fallen to $2.5 trillion, shrinking the gap with Paris to just $156 billion, close to the lowest on record, according to an index compiled by Bloomberg.
More broadly, the Bank of America strategists reiterated their bearish view on global stocks amid mounting recession and credit risks, even as EPFR’s data showed that global equity funds had inflows of $7.6 billion in the week to September 28.
Fed officials reiterated their intention to keep tightening until inflation comes down even if it hurts economic growth, sending bond yields soaring and equities tumbling this week. The S&P 500 Index is headed for its third straight quarter of losses for the first time since global financial crisis.
The EPFR data also showed that bonds had $13.7 billion of outflows in the week, while $8.9 billion flowed into US stocks.
The BofA strategists said to “bite†into the S&P 500 at the 3,300 level — about a 9% decline from the latest close. “Nibble†at 3,600 and “gorge†at 3,000, they wrote. Hartnett and his team added that a drop of 20% below 200-day moving average has been a good entry point back into stocks in the past 100 years.