Equity outflows top £19bn amid China panic

Equities saw their worst weekly outflows on record, as investors pulled $29.5bn (£19bn) in assets in the past week.

Data from Bank of America Merrill Lynch shows that the outflows are the worst since the data collection began in 2002. Tuesday in particular saw £12.3bn of assets pulled from equities, the second worst since the financial crisis.

Emerging markets suffered the most, with £6.8bn in outflows for the week, the worst redemptions since January 2008. It compounds the outflows over the past four weeks, which are now up to £14.3bn.

Despite China being the cause of much of the outflows in the past week, it did not see the largest equity outflows in the emerging markets. Brazil saw 3.7 per cent of its assets pulled in the week, compared to China’s 1.1 per cent. Russia experienced 3.1 per cent of outflows, while India saw outflows of 1.4 per cent.

However, year-to-date China has seen £13.1bn of outflows. 

Risk averse investors rushed to cash in the week, amid fears of further contagion from China, as cash saw £14.3bn in inflows in the week. Inflows to cash over the past two months now amount to £78.6bn, which is the largest since December 2013.

Commodities was the only asset class other than cash to make it through the week unscathed, seeing a 1.3 per cent increase in assets. 

Credit markets also took a blow in the week, as they saw the largest outflows since the US taper tantrum in June 2013.

Emerging market debt funds saw £2.7bn in outflows, high-yield bond funds saw £3.2bn pulled from funds, while investment-grade bonds saw £2.5bn in outflows.

BAML flows