Global equity funds attracted US$51 billion in a single week, the highest in nearly two months! BofA breaks down the "say-one-thing-do-another" phenomenon: many are bearish, but few are actually shorting.

The actual actions of capital are "slapping the face" of pessimistic market sentiment. Boosted by strong earnings and falling oil prices, global equity funds attracted over US$50 billion in a single week. A latest BofA report highlighted this divergence: despite the selloff in US tech stocks and widespread bearish calls, very few investors actually dare to "put their money where their mouth is" and short the market. **Capital "votes with its feet": global equity funds attract over US$50 billion in a single week** According to LSEG Lipper data, in the week ended November 11, European funds attracted as much as US$35.13 billion in net inflows, the largest weekly record since June 2021. This directly drove total weekly net inflows into global equity funds to US$50.99 billion, the highest level since September 23. Meanwhile, US and Asian equity funds recorded net buying of US$6.6 billion and US$6.15 billion, respectively. Capital's preference for the European market was directly reflected in stock indices. Boosted by strong earnings from UniCredit, solid 2027 margin guidance from AI equipment maker Siemens Energy, and optimistic profit prospects from US cloud services upstart CoreWeave (CRWV.US), the pan-European STOXX 600 index hit a record high of 666.58 points on Thursday. Among sector funds, technology, healthcare and financials attracted net inflows of US$2.62 billion, US$833 million and US$820 million, respectively, while industrials saw net outflows of US$1.07 billion. **Bond and money markets "bleed", gold remains hot** In fixed income markets, global bond funds saw weekly net outflows of US$507.89 million, ending a seven-week streak of inflows. Among them, government bond funds swung to net outflows of US$488.8 million after net inflows of US$5.17 billion the prior week. Investors withdrew US$1.72 billion from US dollar-denominated global bond funds while buying US$2.07 billion of corporate bond funds. Money market funds suffered net outflows of US$37.48 billion this week after massive net buying of US$174.22 billion the prior week. In commodities, gold and other precious metals funds maintained high popularity for a second consecutive week, attracting net inflows of US$614 million; energy funds also drew net inflows of US$215.43 million, extending the recent streak of net buying to four weeks. In addition, emerging market equity funds attracted net inflows of US$4.65 billion, the largest weekly inflow in three weeks. But emerging market bond funds suffered net outflows of US$657.44 million, marking a third consecutive week of outflows. **BofA: bearish talk, but honestly "buying, buying, buying"** The trend of continuous global capital inflows into equities was also corroborated by strategists at Bank of America Corp. A team led by Michael Hartnett noted in a report that global equity fund inflows have hit a record high this year, with few investors willing to aggressively short. On an annualized basis, inflows into global equity funds reached as much as US$1.4 trillion. Specifically, US equity funds attracted US$656 billion, tech stock funds drew US$222 billion, and South Korean equity funds took in US$78 billion. "The support that inflows provide to the stock market is impressive, but it also shows that while many investors are emotionally bearish now, very few 'put their money where their mouth is' that is, actually shorting or underweighting," the strategists said. Year to date, the MSCI All-Country World Equity Index has risen 10%, while tech-heavy indices such as the US Nasdaq 100 and South Korea's Kospi have gained 12% and 25%, respectively. However, as doubts about returns on AI investment mount, compounded by elevated oil prices pushing up inflation expectations, driving bond yields higher and turning monetary policy hawkish, these tech indices have recently suffered sharp pullbacks. Hartnett noted that risk assets have struggled over the past six months "because bullish positioning collided with policy tightening." Some summer assumptions proved wrong, including that the Fed would not raise rates and that Democrats would not win big in the midterms, making expectations of an economic boom "the last standing bullish conviction." The BofA team said that although US households' equity wealth has shrunk by about US$3 trillion over the past month, it is still up about US$19 trillion since Trump took office in January 2025. They noted that when the wealthy feel flush and personal consumption accounts for about 70% of the US economy, "it's hard to have a recession." In addition, strategists added that global policymakers view the market as "too big to fail," making it difficult for investors to find reasons to short. They cited examples including a US$15 billion stabilization fund set up in China's Taiwan region, and similar measures by relevant authorities in South Korea and China to curb recent selloffs. However, BofA strategists currently maintain a "risk-off" stance until the rate-hiking cycle ends and financial conditions ease. In their view, this requires three preconditions: US crude oil prices falling below US$70 per barrel, the dollar reversing its recent appreciation, and the 10-year US Treasury yield falling below 4.5%.