It's as if 2022! Funds massively withdraw from stocks and bonds to avoid the risk of conflict with Iran, pouring into cash.

In order to avoid the risks brought by the conflict in Iran, investors have been selling stocks and bonds and increasing their cash assets, a scene reminiscent of the funding strategy after the Russia-Ukraine conflict erupted in 2022. The latest fund manager survey released by Bank of America this month shows that institutional cash holdings have seen the largest increase in six years. At the same time, J.P. Morgan's strategy team stated this week that adjustments to positions triggered by geopolitical conflicts may be far from over. Led by Nikolaos Panigirtzoglou, J.P. Morgan's team pointed out in a research report: "Against the backdrop of sustained high geopolitical and macroeconomic uncertainty, the current cash allocation ratio is still at historical lows, which will put pressure on the future trends of the stock market and bond market." Investors are generally concerned that the surge in energy prices caused by this conflict will exacerbate inflationary pressures and compel major central banks to restart rate hikes. Since March, global stock indices have fallen by a cumulative 5%; Brent crude oil prices have stabilized above $100 per barrel, poised to record the largest single-month increase since 1990. Bond prices continue to decline, pushing U.S. Treasury yields to new multi-month highs. Previously, the market generally expected the Fed to begin cutting rates in 2026, but now the trading market has priced in a 50% probability of the Fed raising rates until October. The European market is also turning towards this direction, as market expectations for rate cuts by the ECB have completely reversed, with bets now on three rate hikes this year, each by 25 basis points. J.P. Morgan strategists stated: "Investors are simultaneously withdrawing from stocks, bonds, and gold markets and significantly increasing their cash allocation." However, they also mentioned that even so, the current cash allocation in the portfolio is still much lower than it was when the Russia-Ukraine conflict just erupted. Since the outbreak of the conflict in Iran, the price of gold has plummeted by over 15%. This is due to the expectation of central banks maintaining high interest rates or even raising rates, which has greatly reduced the attractiveness of zero-interest gold investments. A survey conducted by BofA from March 6th to 12th showed that the proportion of cash in fund portfolios surged from 3.4% in February to 4.3%; during the Russia-Ukraine conflict and the COVID-19 pandemic, this ratio had reached 5.9%.