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May 26, 2022

Global mutual fund investors may offload $350bn worth of equities in 2022

Barclays estimates that global mutual funds investors may offload equities worth a further $350bn this year, unless fear of recession declines, according to a report by Reuters.

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How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
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Investors have been selling equities because of rising inflation. This has forced economies to increase interest rates.

Furthermore, Russia’s military attack on Ukraine also triggered the deepening pressures amid a rise in energy and commodity prices, and growing costs to companies.

According to Barclays, equity outflows made up an average of 2.6% of mutual funds’ assets under management (AUM) in previous periods of major stock sell-offs, such as the Great Financial Crisis of 2008-09, against 0.3% this year.

This means another $350bn of equity sell-off could happen this year unless recession fears vanish.

In a first since August 2020, mutual funds investors have been the net sellers of equities this month. However, the equity outflows are said to be minimal compared to the record $1.3trn inflows since 2020.

Barclays said: “Both economic momentum and EPS revisions momentum have turned negative, which suggests the direction of travel is likely towards more (equity) outflows, although the magnitude is unclear at this stage.”

The bank also noted that the consumer outlook is not likely to improve if the US Federal Reserve continues to be aggressive on monetary policy, although at present income and business fundamentals look supportive.

The US Federal Reserve has pledged to act aggressively by increasing the cost of borrowing.

Free Report
img

How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.

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