Global investors saw a consecutive second week of net selling of equity funds in the week ending September 11, mainly due to concerns about the health of the US economy and political uncertainty ahead of the US presidential debates. Nevertheless, the market's optimistic expectations of a possible interest rate cut by central banks eased the outflow of funds.

Data from the London Stock Exchange shows that global equity funds saw net redemptions of $3.46 billion this week, down from $4.96 billion the previous week. Last week, global stock markets experienced a sell-off due to signs of economic slowdown in the US, but with the European Central Bank cutting interest rates and market expectations of a possible 50 basis points cut by the US Federal Reserve at its upcoming meeting, global stocks rebounded by over 2% this week.

In terms of regional distribution, US equity funds experienced a net selling of $7.82 billion last week, a decrease from $11.54 billion the previous week. Meanwhile, Asia and Europe funds attracted inflows of $2.91 billion and $0.793 billion respectively.

Ajay Rajadhyaksha, Chairman of the Barclays Global Research Department, pointed out in a report that due to the global trend of interest rate cuts and low unemployment rates, they are more inclined towards global equities than fixed income products. However, he also mentioned that investors may adopt a wait-and-see approach temporarily, awaiting further clarity on the outcome of the US presidential election.

In terms of sectors, the technology sector saw outflows of $1.97 billion in the week ending September 11, the largest scale since November 2023. Financial stocks also experienced outflows of $1.53 billion. In contrast, consumer necessities and utility stocks attracted inflows of $1.12 billion and $0.878 billion, respectively.

Driven by risk aversion, money market funds and government bond funds received capital shareholdings of $21.67 billion and $4.14 billion respectively this week. Global bond funds attracted funds for the 38th consecutive week, with a net inflow of $11.81 billion, of which short-term funds and high-yield funds received inflows of $3.12 billion and $1.5 billion respectively.

Gold and other precious metals funds maintained attractiveness for the fifth consecutive week, with a net purchase amount of $0.472 billion, while the inflow of energy funds also increased by $0.15 billion.

Emerging market fund data shows that stock funds saw outflows for the 14th consecutive week, totaling $1.05 billion, while bond funds achieved inflows for the 12th consecutive week, totaling $0.567 billion.

Editor/ping