Bank of America CorporationGlobal equity funds saw their first outflows in 2021 as growing pessimism about passing Biden's spending plan triggered massive outflows, while cash, government bonds and gold saw large inflows, according to a weekly report released on Friday.
Us stocks are on track to achieve double-digit gains for the third year in a row, but the market has stalled this week because of growing hawkish calls from central banks.
Global equity funds outflows totaled $24.2 billion, the largest since March 2020, as investors turned to cash and poured $39.6 billion into it, BofA said, citing EPFR data. Bond funds have inflows of $10 billion.
"pessimism about passing the bipartisan infrastructure bill and the $3.5 trillion spending bill led to the second-largest outflow from infrastructure funds in history and the largest outflow from consumer funds so far this year," a team of analysts led by Michael Hartnett, BofA's chief investment strategist, wrote in the report.
Recently, there has been growing concern that the gradual withdrawal of stimulus policies by central banks around the world during the epidemic will have an impact on markets. BofA strategists point out that by the second half of 2022, global central banks will inject only $100m of liquidity into the market, down from $3.1 trillion this year.
More worryingly, there are signs of weakness in the stock market. BofA said that while capital inflows almost coincided with the rise in share prices, inflows increased by more than 90 per cent in 2021, while share prices rose only 12 per cent.
The world's major stock markets have fallen into a "high holding model" since April 2021, and technology funds have seen outflows for the first time since June 2021.