Global equity funds post week 4 of outflows amid economic concerns

May 12 (Reuters) – Global equity funds reported a fourth consecutive week of outflows, hit by a stalemate in US debt ceiling talks and lingering fears of a slowdown.

Investors withdrew $4.9 billion from global equity funds in the week ending May 10: outflows from US equity funds totaled $5.7 billion, while Asian and European funds received minor inflows of $1.1 billion and $0.59 billion, respectively .

From sectoral funds, the largest amount of funds – USD 1.5 billion – flowed from the financial sector, and from real estate and energy funds – USD 446 million and USD 376 million, respectively.

Analysts stressed that disputes between Republicans and Democrats over the debt limit could hurt the US economy, and if the confrontation actually leads to bankruptcy, it could lead to the loss of billions of dollars in the stock market.

US inflation data released on Wednesday showed a weakening of price pressure, but analysts remain cautious.

U.S. consumer price growth in April was below expectations, but that doesn’t mean investors should prepare for a new round of rally in the stock market, UBS’s Mark Hefele said.

“In fact, we believe the stock picture is much more complex as the bar has been set higher to improve performance with current high valuations.

“In our view, the risk return on high-quality bonds appears to be more attractive, and we believe it is time to build a diversified bond portfolio to increase the stability of the return,” added Häfele.

In one week, global bond funds raised $3.4 billion, marking the third consecutive inflow of funds.

$3.01 billion inflows to public debt funds, while high-yield bond funds and inflation-linked bond funds saw outflows of $1.5 billion and $125.3 million, respectively.

Investors continued to invest in global money market funds for the third week in a row, contributing $10.8 billion.

»We suspect that inflows to money market funds may remain strong until the dispute over the US debt ceiling is resolved, confidence in the stability of regional banks returns and uncertainty about a possible US recession and a review of companies’ financial results, reduction of reductions – said Kendall Dilly from Vineyard Global Advisors.

Data from 23,937 Emerging Markets funds showed that Emerging Markets Equity funds reported a net inflow of $838 million. At the same time, the region’s bond funds flowed out in the amount of USD 622 million.

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(Patturaja Murugabupati in Bangalore, translated by Tomas Kanik)