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A $100 Billion Hole May Be European Market Rally's Best Ally


Added 11-14-19 02:04:02am EST - “(Bloomberg) -- European stocks are near a four-year high and technical indicators suggest that the rally may have gone too far. But some signals still favor a market ignored by investors for much of this year.Fueled by the optimism…” - Finance.yahoo.com

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Posted By TheNewsCommenter: From Finance.yahoo.com: “A $100 Billion Hole May Be European Market Rally’s Best Ally”. Below is an excerpt from the article.

(Bloomberg) -- European stocks are near a four-year high and technical indicators suggest that the rally may have gone too far. But some signals still favor a market ignored by investors for much of this year.

Fueled by the optimism over U.S.-China trade talks, the Stoxx Europe 600 has outperformed the S&P 500 this fall and is now heading for its best year in a decade. However, even the latest gains look modest in relation to a $100 billion investment exodus from the region’s equity funds in 2019.

“Positioning was weak in Europe this year, investors maintained a very prudent stance as a result of perceived high political risks,” said Stefano Zoffoli, Zurich-based chief strategist at Swisscanto Invest, which oversees about 160 billion Swiss francs ($161 billion). “This is something that could underpin the markets in the next three to six months.”

So while the market is up 20% this year, investors have been pulling money out of European-focused stock funds almost non-stop since March 2018. This mood started to shift in mid-October when the optimism of a Brexit deal and a global rotation into value stocks fueled three weeks of inflows of about $3.3 billion.

After Bank of America Corp.’s fund manager survey showed for months that European equities were one of the world’s biggest underweight positions, in November the allocation jumped to the highest since August 2018.

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