July 24, 2015 / 10:49 AM / 4 years ago

Investors begin "capitulation" selling of EM, gold, resources -BAML

LONDON, July 24 (Reuters) - Investors are dumping billions of dollars worth of gold, commodities and emerging market assets in a wave of “capitulation” selling, Bank of America Merrill Lynch said on Friday.

In the week where gold and copper prices hit five- and six-year lows, respectively, funds flows data showed the biggest outflow from precious metals in four months and emerging market fund outflows reaching $10 billion over the last two weeks.

“Capitulation (is) beginning in emerging markets, resources and commodities,” BAML analysts wrote.

The receding threat of Greece crashing out of the euro has helped deflate safe-haven demand for gold, while the likelihood of a U.S. interest rate hike this year has spooked emerging markets.

Investors redeemed $1.1 billion from precious metals funds in the week ending July 22, the biggest outflow in four months, BAML said in its report, which also cited the latest weekly flow figures from data-provider EPFR Global.

A net $3.3 billion was pulled from emerging markets funds, bringing the total outflow over the last fortnight to $10 billion.

On Friday, gold hit a five-year low of $1,077 an ounce and copper fell to a six-year low of $5,191.50 per tonne. Many emerging market currencies, such as the Indonesian rupiah, Thai baht and South Korean won hit multi-year lows too.

Bond funds attracted a net $5.5 billion inflow, the largest in three months, as the 10-year U.S. Treasury yield once again failed to break above 2.5 percent.

In stocks, Europe was the destination of choice as the Greek crisis abated. Investors ploughed a net $6 billion into the region’s equity funds, the largest net inflow in four months.

U.S. equity funds posted a net $3.7 billion outflow, BAML said, although globally, equity funds pulled in $1.7 billion. (Reporting by Jamie McGeever; Editing by Hugh Lawson)

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