LONDON • Investors pulled a record amount of money out of global equity funds in the week to Aug 26, according to Bank of America Merrill Lynch (BAML), a measure of the alarm that China's markets and economy have aroused around the world.
The US$29.5 billion (S$41 billion) outflow, including US$19 billion in just one day, was the largest since the series began in 2002, surpassing any weekly outflow engendered by the collapse of Lehman Brothers in 2008.
The US$19 billion outflow on Aug 25 was the second-largest daily outflow since 2007 when comparable daily flow data became available, BAML said in a note yesterday titled: The Total Risk Surrender.
Worries over the health of China's economy and Beijing's struggle to contain the market upheaval since it devalued the yuan earlier this month sent Chinese stocks into a tailspin that pulled down global markets.
The rebound was sharp: Oil, for example, rose 10 per cent on Thursday alone. But the BAML figures, in part based on weekly flows from data-provider EPFR Global, are for the week to Wednesday Aug 26.
Emerging market equity funds were hit hard.
Investors withdrew a net US$10.5 billion, the largest outflow since January 2008, BAML said.
This tallied with a separate report from the Institute of International Finance (IIF) showing the largest outflow from emerging market stocks since the mid-2013 "Taper Tantrum" when the US Federal Reserve signalled it might be about to raise interest rates, but then quickly backed down.
Investors pulled a net US$8.7 billion out of emerging market stocks this month, the IIF report said.
"Emerging market investors have been spooked by rising uncertainty about China, and stress has been exacerbated by a combination of fundamental concerns about merging market prospects and volatility in global financial markets," said Mr Charles Collyns, chief economist at the IIF.
On Monday, the seven emerging markets that provide daily flows data experienced outflows of US$2.7 billion, as much as on Sept 17, 2008, during the week of the Lehman Brothers bankruptcy, the IIF said.
In developed markets, European stocks posted a US$3.6 billion outflow in the week to Aug 26, the first outflow in 15 weeks and the biggest since October last year, BAML said.
In fixed income, US$11.7 billion left bond funds, the largest since June 2013. Emerging market bond funds also had their biggest outflow since June 2013, BAML said.
So far this year, emerging market equities have shed US$48.4 billion and developed market equities have attracted US$48.9 billion, according to BAML.