May 1, 2020 / 11:23 AM / a month ago

Fund flows point to market rally curve flattening: BOFA

LONDON (Reuters) - Investment fund flows point to a recent sharp rebound in world stocks and other asset classes flattening in the coming weeks, analysts at investment bank BofA said in a weekly research note.

Data over the last week show investors have piled $91.5 billion into safe-haven cash, $10.6 billion into bonds and $0.8 billion into gold, BofA’s number crunching showed, while $6.7 billion has been withdrawn from of equity-focused funds.

Emerging markets have also suffered, with debt funds seeing $1.5 billion in outflows for their eighth weekly drop in the last nine weeks, while $3.4 billion was pulled out of equity funds in what was an 11th straight week of outflows.

BofA’s analysts said the “pain trade” caused by ongoing stimulus to help economies cope with coronavirus-linked shut downs could still push stocks higher, but that the rally could peak in May or June.

The “structural bear” case meanwhile was rising unemployment, “bigger government”, higher taxes, tougher regulation and lower corporate profits and dividend cuts, all of which could lead to a “summer swoon” in markets.

Reporting by Marc Jones; editing by Simon Jessop

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