ADVERTISEMENT

Curse of $100 Billion Outflows Follows European Stocks Into 2020

The new year has started, but for European equities it’s the same old story. 

Curse of $100 Billion Outflows Follows European Stocks Into 2020
A collection of U.S. one-hundred dollar bills sit on a black background in this arranged photograph in Hong Kong, China. (Photographer: Paul Yeung/Bloomberg)

(Bloomberg) -- The new year has started, but for European equities it’s the same old story.

European stock funds began 2020 with the biggest outflows in 14 weeks, shedding $1.7 billion in the week through Jan. 8, according to Bank of America Corp. and EPFR Global data.

The investor exit follows about $100 billion in almost non-stop redemptions that European equity funds saw last year as traders fled Brexit uncertainty and hid in havens, such as bonds. This week marked a return to defensive instruments after the flare-up in U.S.-Iran tensions whipsawed risk assets, fueling a record $23 billion inflow into bonds and a $47 billion addition to money-market funds.

Appetite for U.K. stocks also took a hit, with investors pulling $495 million following 11 weeks of inflows on optimism the country won’t crash out of the European Union without a deal. However, 2020 has brought new concerns as Boris Johnson faces a fraught year of negotiations with the European Union after stressing that Britain won’t extend its post-Brexit transition period beyond the end of the year.

Curse of $100 Billion Outflows Follows European Stocks Into 2020

In contrast to European-focused long-only mutual funds, the region’s exchange-traded funds have been enjoying inflows. A record 107 billion euros ($119 billion) flowed into the continent’s ETFs last year and so far in 2020, the biggest European stock ETF Vanguard FTSE Europe has seen $72 million come in.

Japanese and emerging-market equity funds were the beneficiaries of investor attention this week, attracting $1.7 billion and $1.9 billion respectively, according to BofA and EPFR Global data.

To contact the reporter on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, Paul Jarvis

©2020 Bloomberg L.P.