Investors poured a record $6 billion of new capital into European stock funds in the past week, underlining the voracious appetite for assets across the continent as growth accelerates, earnings recover and political fears recede.
It was the first time the flow, measured over the five trading days to May 10th, had passed $6 billion since at least 2000 when EPFR, a research and consultancy group, began tracking the data.
The flows mark a vote of confidence for an asset class that suffered a bruising 2016. During the year investors withdrew nearly $100 billion from European stock funds as central bankers worked to tackle deflation and the UK’s Brexit vote fuelled uncertainty.
European growth prospects have also improved. Figures on Friday showed the German economy, Europe's largest, picked up speed in the first quarter, growing 0.6 per cent. Brussels on Thursday upped its forecast for euro zone growth as a whole to 1.7 per cent in 2017. Surveys of manufacturers show activity is growing at a faster pace than in the US.
The shift into Europe has come at the expense of US funds, which suffered their second consecutive week of outflows despite the S&P 500 briefly touching a record. Investors pulled $2.4 billion from US portfolios in the past week.
– (Copyright The Financial Times Limited 2017)
