FILE PHOTO – A man walks past the Bombay Stock Exchange (BSE) building in Mumbai, India October 4, 2018. REUTERS/Francis Mascarenhas
LONDON (Reuters) – Investors pumped record high volumes of cash into emerging markets shares and bonds in the past week, Bank of America Merrill Lynch (BAML) said on Friday amid growing expectations of a weaker U.S. dollar.
Flows into bonds reached $11.1 billion, the biggest since May 2018, $4.3 billion went into equities and $400 million were pulled out of precious metals, marking the first drop in nine weeks, according to the report based on EPFR data and tracks fund flows from Wednesday to Wednesday.
It was also the biggest week of inflows in three years to high-yield bonds with $4.8 billion and emerging market debt with $4.4 billion.
Investors have piled into emerging market equities and bonds in recent months amid expectations that the U.S. Federal Reserve will not raise interest rates as quickly as previously expected, pushing the U.S. dollar lower.
In the note, BAML chief investment strategist Michael Hartnett told clients that in his view “the greatest threat to EPS (earnings per share) in the next 3 years is an acceleration of global populism via taxation, regulation & government intervention”.
BAML said its Bull and Bear indicator rose further into neutral territory to 4.4.
Reporting by Julien Ponthus; editing by Josephine Mason