Global equity funds see a second weekly outflow on slowdown worries
Global equity funds faced a second straight week of outflows in the week to 6 July, as investors remained concerned about a global economic slowdown and recession risks due to interest rate hikes by major central banks.
According to Refinitiv Lipper, investors withdrew a net $7.74 billion out of global equity funds. That compares with outflows of $8.92 billion in the previous week.
Data showed US manufacturing activity slowed more than expected in June, while the euro zone's business growth also moderated. read more
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"A US recession starting this Q4 is our new base case. We also expect recessions across the euro area, UK, Japan and other smaller economies," Nomura said in a note on Friday.
"This synchronised global growth downturn would slow G3 GDP growth to -0.8% y-o-y in 2023 from 2.0% in 2022."
US and European equity funds recorded net selling of $5.11 billion and $4.89 billion respectively, although investors purchased Asian funds worth a net $1.05 billion.
Among sector funds, healthcare funds drew $1.07 billion in net buying, the biggest inflow in five weeks but financials, metals and mining, and industrials saw outflows worth $1.16 billion, $807 million, and $702 million respectively.
On the other hand, safer money market funds obtained a massive $64.78 billion, their biggest weekly inflow since 27 October.
Meanwhile, selling pressure in bond funds eased, as outflows reduced to $429 million, the lowest withdrawal in five weeks.
Global government and inflation-protected funds received $917 million and $213 million respectively, while high yield funds lured $219 million, their first weekly inflow in five weeks.
Investors sold short- and medium-term funds worth $6.01 billion, marking a 26th weekly outflow in a row.
Data for commodity funds showed investors sold precious metal funds worth $2.06 billion, the biggest outflow since March 2021, while energy funds had marginal net selling at $75 million.
An analysis of 24,355 emerging market funds showed equity funds had a third weekly inflow, worth $261 million, but bond funds recorded outflows of 755 million in a fourth weekly net selling in a row.
