February 29, 2020 / 12:43 AM / a month ago

Repatriation flow data indicates U.S. investors still catching up on coronavirus

NEW YORK, Feb 28 (Reuters) - U.S. fund managers were behind on factoring in the impact of coronavirus and still have some catching up to do, according to a read of repatriation flows, which typically spike in times of caution, policy and risk analysis firm Exante Data said.

Exante tracks high frequency capital flows partly by looking at U.S. investor flows to and from international equity ETFs. Selling such instruments and bringing funds back into the United States and into the dollar currency causes such flows.

For the period of Monday to Thursday this week there were $3.3 billion in such repatriation flows by U.S. investors, according to Reuters calculations of data from Exante. While significant, that is less than the $3.6 billion seen in a four-day period when flows spiked in mid-August last year when investors were worried about the U.S.-China trade war.

"We think U.S. investors have been slow to recognize the significance of COVID relative to global peers, particularly to those located in Asia," said Grant Wilson, Head of Asia Pacific, Exante Data. "We expected to see more repatriation flows here, as home bias tends to prevail in periods of market turmoil."

Wilson said that instead, there had been a minor bout at the end of January when COVID first came on the scene, and similar flows again this week.

"It will pick up for sure. The collapse in gold today suggests investors are reducing gross notional exposures across the board and heading to cash."

Coronavirus panic sent world stock markets tumbling again on Friday, with an index of global stocks setting its largest weekly fall since the 2008 global financial crisis, and more than $5 trillion wiped from global market value this week. Spot gold dropped 3.5% to $1,584.51 an ounce after touching a 7-year high on Thursday.

Wilson said Exante has seen different levels of awareness of coronavirus across its client base, with those proximate, such as hedge funds in Singapore and Hong Kong, early and responsive, while at the other end of spectrum is real money, particularly in the United States, also with private banks. (Reporting by Megan Davies; Editing by Ira Iosebashvili and Daniel Wallis)

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