LONDON (Reuters) - The scale of withdrawals from UK equity funds was the second highest on record because of uncertainty over the June 23 referendum on Britain’s membership of the European Union, Bank of America Merrill Lynch said on Friday.
Worries that Britain, the world’s fifth-largest economy, could decide to quit the EU in next week’s vote have dominated markets this week and driven investors towards safe-haven assets such as gold and away from stocks.
“June thus far has been all about the risk-off Brexit trade,” BAML strategists wrote in a note to clients.
While betting odds indicate that Britons will vote to stay in the EU, some recent opinion polls have put the “Leave” camp favouring Brexit as being in the lead.
However, campaign activities were suspended late on Thursday, with Britain’s politicians and public left in shock after a pro-EU lawmaker was fatally shot in the street. One poll set for publication on Friday was delayed until the weekend.
BAML said the UK equity funds lost a net $1.1 billion, the biggest outflow in 13 months, in the week to June 15.
The UK funds registered a record weekly outflow in the middle of last year when Britain’s share market came under intense selling pressure on some poor UK economic data and uncertainty regarding Greece’s debt situation.
On a broader scale, European equity funds saw their 19th straight week of outflows, with $4.7 billion, the largest amount in seven weeks, leaving the funds.
Precious metals continued to draw in risk-averse investors, BAML said.
Global bond funds witnessed $1.2 billion of outflows, the first time in 11 weeks and the largest in five months, it said, adding that precious metals attracted $1.1 billion during the week to post inflows in 21 out of the previous 23 weeks.
Prices of gold rose on Friday to trade near a two-year high. The precious metal is generally seen as a safe-haven asset and its appeal rises in difficult times.
Reporting by Atul Prakash; Editing by Keith Weir