(Reuters) – Global equity funds have recorded their biggest weekly outflows since March 2020, hit by recession fears as central banks vow to keep interest rates higher to tame inflation.
Data from Refinitiv Lipper showed a net withdrawal of $33.6 billion in the week to Dec. 21.
GRAPHIC: Global fund flows – https://fingfx.thomsonreuters.com/gfx/mkt/zgvobbemlpd/global%20flows.jpg
The U.S. Federal Reserve and the European Central Bank raised interest rates in their final policy decisions of the year last week, with the Fed Chair saying the central bank would deliver more hikes in 2023 to combat inflationary pressures.
The Fed has delivered 400 basis points (bps) of rate hikes this year, and the European Central Bank a record 250 bps.
GRAPHIC: Global sector flows – https://fingfx.thomsonreuters.com/gfx/mkt/lbpgggyqepq/sector%20flows.jpg
The MSCI All Country stock index has fallen about 20% this year, more than reversing 2021’s 17% gain.
Global bond funds also saw a net weekly outflow, of $14.1 billion, the biggest in more than two months. Money market funds recorded net sales of $41 billion.
GRAPHIC: Bond flows – https://fingfx.thomsonreuters.com/gfx/mkt/egvbyyezrpq/bond%20flows.jpg
Among commodities, precious metal funds attracted a net $362 million, compared with an outflow of $220 million in the previous week, while investors withdrew a net $523 million from energy funds, the most this year.
According to data available for 24,687 emerging market (EM) funds, a net $664 million flowed out of bond funds, while a meagre $195 million was added to equity funds.
GRAPHIC: EM flows – https://fingfx.thomsonreuters.com/gfx/mkt/lgpdkkgryvo/EM%20flows.jpg
(Reporting By Patturaja Murugaboopathy; Editing by Kirsten Donovan)