LONDON May 19 Investors ditched almost $9
billion of U.S. equities as political turmoil in Washington
built up in the past week, Bank of America Merrill Lynch figures
showed on Friday.
Funds invested in U.S. equities saw outflows of $8.9 billion
in the week to Wednesday - their third straight week of outflows
-- while those dedicated to European stocks added $1.1 billion,
the largest in 39 weeks and the ninth straight week of inflows.
"D.C. disruption: new risk ... Washington political malaise
causes capital flight from U.S.," BAML summarised, referring to
White House battles over the struggles over alleged links to
Russia and to the removal of the FBI director.
The big winner for the week, meanwhile, were global tech
stocks, now enjoying the biggest annualised inflows since the
Tech stocks raked in $1 billion in the week to Wednesday in
their 11th straight week of inflows, BAML said in its regular
'Flow Show' analysis.
It also noted that the Nasdaq internet index, a modified
market capitalisation-weighted index designed to track the
largest and most liquid U.S. online firms, was running at an
annual rate of 75 percent gains year to date.
It expressed some concern about this.
"(The) longer it takes the economy and yields to pick-up,
greater (the) risk of tech mania," BAML said.
Investors also remained in emerging markets, with equities
adding $3.9 billion in a ninth week of gains while developing
market debt saw inflows of $1.6 billion in their 16th straight
"Emerging markets equal year-to-date flow winner and
year-to-date return winner as weaker dollar, lower yields
overwhelm China credit fears," BAML said in its note.
The data, however, was collected before a broad sell of
roiled emerging markets on Thursday following allegations that
Brazil's President Michel Temer condoned bribes to silence a key
witness in a corruption probe.
Overall, bond funds attracted $9.7 billion of inflows in the
week to Wednesday, with around two thirds of that ($6.6 billion)
going into investment grade funds, BAML said.
(Editing by Jeremy Gaunt)