Tech stocks, emerging market debt see inflows on "stagflation" bets

  • 9/10/2021
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LONDON, Sept 10 (Reuters) - Investors rushed to scoop up emerging market debt and technology shares in the week to Wednesday, BofA Securities said in a weekly note, with the U.S. investment bank"s own private clients boosting their equity allocations to a record high. Equity funds pulled in $12.7 billion while bond funds attracted $12.6 billion, BofA found, citing EPFR data. Cash was also surprisingly in demand with inflows at a five-week high at $15.2 billion. Real estate investment trusts, seen as providing high but sustainable returns, benefited from an overall macroeconomic picture marked by slowing growth and rising inflation, enjoying their biggest inflow in 2-1/2 years at $1.8 billion. And even though private clients boosted their equity allocations to a record high of 65.3% at the expense of bonds and cash, their asset allocation has tilted towards bank loans, inflation protected securities and utility shares. Financial stocks were hit by a $2 billion outflow, and clients pulled $200 million out of gold. "The macro backdrop is higher inflation, hawkish central banks, weaker growth which means stagflation," analysts led by Michael Hartnett at the bank said in a note. BofA said the flood of cheap central bank money sloshing in financial markets is set to slow. It expects bond purchases by global central banks to fall to $0.3 trillion in 2022, a fraction of $2.3 trillion in 2021.

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