Never sold as many shares as in the past seven days
In the week ending Wednesday, investors sold off shares at the highest weekly rate ever, for a net worth of $41.9 billion, BofA Global Research reported on Friday, which attributed the massive sale to tax reasons. .
U.S. value funds and passive stocks also saw record weekly net outflows of $17.2 billion and $27.8 billion, respectively, according to the bank.
According to the BofA, the reason for the record outflows is "tax loss harvesting", a strategy which involves the sale of loss-making assets to offset taxes on capital gains.
Investors also reduced their cash holdings by a net $59.5 billion, the biggest drop since February 2022, and sold the most investment grade and high yield bonds in nine weeks. Conversely, emerging market local bonds recorded their first net inflow since April, while emerging market equities recorded their third week of inflows, adding a net $3.2 billion.
The stock sell-off came in a week when investors were shaken by the Bank of Japan's surprise monetary policy change on Tuesday.
With a historic approach of ultra-low interest rates, deflationary Japan has set a 30-year low for global rates, the BofA said, adding that this floor would now be higher as yield curve control is expected to end. BoJ yields in 2023.
As a result, the bank's analysts said they preferred commodities over credit, "rest of the world" stocks over US stocks, and small (cap) over large. At a sector level, they favor value stocks over growth stocks and industrials and banking stocks over technology and private equity stocks.
Stocks took a hit last week after major central banks, including the Federal Reserve and the European Central Bank (ECB), raised interest rates and warned that more hikes are needed to contain inflation.
The US benchmark S&P 500 index is down 3.6% over the past ten days and hits a more than six-week low, while the pan-European STOXX 600 index (.STOXX) retreated from last six-month highs week.
Bond funds recorded net outflows of $10 billion, prompting a small dip in the BofA's "Bull & Bear" indicator to 3 from last week's 3.1, the highest since March 15.
Then those who have the money start withdrawing it, if only to realize the losses and not pay any taxes on previous capital gains. However, this justification does not hold for many bond markets, where one should expect an inflow, not an outflow, of funds, especially the US. It seems clear that, at least in the United States, it is thought that the FED will raise rates again and in any case that the economic and financial crisis is upon us.
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The article Never sold as many shares as in the past seven days comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/mai-vendute-tante-azioni-quanto-negli-scorsi-sette-giorni/ on Sat, 24 Dec 2022 07:00:35 +0000.