Investors dumped U.S. value stocks and bought growth stocks in the week to Wednesday, according to BofA Global Research. There were $1.8 billion of inflows to U.S. growth stock funds in the week, and $2.6 billion of outflows from U.S. value stocks. This shift in investor sentiment comes as the U.S. consumer price index remained unchanged in May, leading to increased speculation that the U.S. Federal Reserve may cut interest rates multiple times this year. The Federal Reserve itself has revised its projection for rate cuts, now forecasting only one cut this year instead of the previously anticipated three cuts. Additionally, investors allocated $40 billion to cash, indicating a cautious approach. They also purchased $1.8 billion of U.S. treasuries and $7.7 billion of investment-grade bonds, suggesting a preference for safer assets. [ec3d8dc3]
In a separate development, U.S. equity funds experienced the largest weekly outflow in 18 months, with investors selling a net $21.93 billion in the seven days leading up to June 12. This marked the largest weekly net disposal since mid-December 2022. The outflows were driven by investors booking profits and exercising caution ahead of the Federal Reserve's policy decision. Large-cap equity funds saw the most significant outflow, with $14.94 billion leaving these funds, the largest weekly outflow since December 21, 2022. Outflows also affected multi-cap, mid-cap, and small-cap funds. In contrast, investors sought safety in U.S. bond funds and money market funds, adding $1.72 billion and $20 billion, respectively. U.S. sectoral equity funds enjoyed their second consecutive week of inflows, with about $1.85 billion added, primarily driven by net purchases in the technology sector. U.S. bond funds also attracted a net $4.82 billion, marking their second consecutive week of inflows. [fa35d055]
US equity funds have attracted the biggest inflows this year to date, with nearly 7.8 billion baht invested, an increase of 5.04% from 2023. Thai stocks recorded major outflows, with nearly 10 billion baht pulled out of mutual fund investment in Thai stocks. Large-cap stock funds in Thailand returned an average of -3.54% this year. Investors turned to global exchanges, including the US, India, Vietnam, and China. Indian equity funds had a net inflow of 2 billion baht in March, the highest since September 2017. China's stock market is showing signs of improvement, with Chinese stock funds having a net inflow of roughly 1.5 billion baht in May. Vietnam's stock funds recorded a return of 13.1% this year. Technology stocks generated the highest average return of 25% over the past year. Technology equity funds had a net inflow of 2.5 billion baht this year. The trend for the rest of the year will depend on the Federal Reserve's rate comments. [cc4db592]
Foreign investors bought a net $7.16 billion worth of Asian equities in June, following two months of selling. The influx of foreign funds was driven by easing U.S. price pressures, which raised hopes of interest rate cuts by the Federal Reserve. The surge in global AI-linked firms also enhanced demand for tech and semiconductor exports from Asia. South Korea and Taiwan, major beneficiaries of AI investments, saw foreign purchases in equity markets worth $3.83 billion and $1.94 billion, respectively. Indian markets attracted $3.19 billion in foreign funds, while stock markets in Thailand, Vietnam, the Philippines, and Indonesia faced net outflows. [93f1f7a8]
Investors poured billions into global equity and bond funds last week, spurred by weakening US economic data and dovish remarks from Fed Chair Jerome Powell. Hopes for US rate cuts surged after weak manufacturing and services data, along with softer inflation figures. Global equity funds saw inflows of $15.41 billion, primarily from US ($8.62 billion), European ($3.81 billion), and Asian ($2.34 billion) investments. The technology sector led with $810 million, marking its fourth consecutive week of gains. Bond funds attracted $12.18 billion, continuing a 28-week streak, with corporate ($1.99 billion) and government bond funds ($1.98 billion) seeing strong investments. The strong inflows into equity and bond funds indicate heightened investor optimism, but also cautious sentiment as evidenced by the substantial $50.6 billion moved into money market funds for safety. The preference for equities, particularly in technology and financial sectors, alongside robust bond fund investments, highlights a shift in economic strategies. Emerging markets saw mixed results, with equity funds attracting $288 million, but bond funds facing $1.35 billion in outflows. [3bbdbaa8]