LONDON Investors' exodus from equity funds continued in the second week of January, wiping $5.7 trillion off global stocks in the first nine trading days of 2016, Bank of America Merrill Lynch (BAML) said on Friday.
Some $11.9 billion was pulled from equity funds, the largest outflow in 18 weeks, but the bank, which also uses data from the EPFR Global fund research house, said redemptions were not yet big enough to indicate "true capitulation".
Over the last two weeks, some $21 billion has been pulled from equity funds, compared with $36 billion during the August 2015 sell off, and a whopping $85 billion during the 2008 global financial crisis.
The bank also noted that some of its U.S. East Coast clients were "not yet willing to accept that we are already well into a normal, cyclical recession/bear market".
The S&P 500 has lost almost 6 percent since the start of the year, with $12.5 billion of outflows from U.S. equity funds over the week to Jan. 13.
Investors have been panicked by wild swings in Chinese mainland stocks, and a general deterioration in the outlook for commodity producers, as oil prices have tumbled to 12-year lows. But selling has not been limited to energy and materials stocks.
The bank said there had been "carnage" in technology stocks, with $1.1 billion of outflows, and in financials, which suffered redemptions of $700 million -- the largest in 20 weeks for both sectors.
It also noted the selling had spread to European equity funds, which chalked up their first net outflows in 15 weeks, albeit a modest $100 million. Emerging equity funds suffered $1.6 billion of outflows, the largest in five weeks.
Japanese equity funds bucked the trend, attracting $2 billion, their largest inflows in 17 weeks.
For the most part, investors sought safety in bond funds, which attracted $2.3 billion, and money-market funds, which took in $24 billion. That marked a clear rotation out of high yield and emerging market debt into the safer havens of treasury, investment grade and municipal bonds.
High-yield bond funds lost a chunky $4.1 billion while emerging market debt funds lost a more modest $500 million. On the flip side, government and treasury bond funds attracted $3.4 billion, their largest inflows since February 2015.
Commodities also attracted $1.5 billion of inflows, the largest in 12 months, suggesting the heavy selling of the last two weeks, which has seen Brent crude crash below $30 a barrel, has attracted some bargain hunters. [O/R]
(Editing by Catherine Evans)