August 4, 2017 / 10:12 AM / a year ago

Investors dump healthcare stocks, appetite for tech fades: BAML

LONDON (Reuters) - Healthcare stocks suffered their largest outflows in six months after U.S. attempts to repeal Obamacare crashed and burned, while appetite for tech stocks faded after a strong run, Bank of America Merrill Lynch data showed on Friday.

The New York Stock Exchange (NYSE) is pictured in New York City, New York, U.S., August 2, 2017. REUTERS/Carlo Allegri

The weekly data, which tracks fund flows from Wednesday to Wednesday, showed investors pulled $900 million from healthcare stocks, the largest outflows in 27 weeks, after Republican party attempts to scrap Obamacare in the United States failed.

Technology stocks, which have had a rollercoaster ride over the last two months, also fell from favor, with some $100 million of outflows.

Year-to-date inflows to the tech sector are on track for a record 18 percent asset growth in 2017 with the S&P tech index .SPLRCT up around 22 percent, but despite strong earnings-per-share growth, inflows are now slowing, the bank noted.

Global tech stocks leapt on Aug. 2, with Asian component-makers hitting 17-year peaks after stellar earnings from Apple (AAPL.O). But the Apple halo effect soon faded with tech shares tumbling on Aug. 3 as traders rushed to bank profits.

More broadly, BAML noted a “risk off” sentiment among investors with bond funds attracting $7.3 billion overall, compared with inflows of $2.3 billion for equities.

Within fixed income, safe haven government and treasury bond funds attracted $200 million, the first in three weeks. But the lion’s share went to investment grade corporate bonds, which pulled in $5.8 billion, and emerging market debt, which attracted $1.9 billion.

On the equities side investors continued to shun the United States, withdrawing $2.7 billion in a seventh straight week of outflows. By contrast, emerging markets attracted $2.2 billion, Europe $1.3 billion and Japan $800 million.

Year to date, U.S. stocks have suffered almost $100 billion of outflows, whilst flows for the rest of the world are flat, BAML said.

Emerging market equities continued to top BAML’s league table of cross-asset winners and losers, returning over 26 percent year-to-date. European equities are in second place, delivering 20.3 percent in U.S.-dollar terms.

Reporting by Claire Milhench; Editing by Angus MacSwan

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