Global Stock Funds Attract $51 Billion in a Week, Hitting a Two-Month High! Bank of America Analyzes the Discrepancy: Many Bearish Voices, Few Actual Short Sellers

On November 13, the actual actions of funds are "slapping" the pessimistic market sentiment. Boosted by strong earnings reports and a drop in oil prices, global stock funds attracted over $50 billion in a single week. A recent report from Bank of America revealed this divergence: despite the sell-off in U.S. tech stocks and a chorus of bearish sentiments, there are very few investors willing to actually short the market.

Funds "Vote with Their Feet": Global Stock Funds Attract Over $50 Billion in a Week

According to LSEG Lipper data, in the week ending November 11, European funds attracted a net inflow of up to $35.13 billion, marking the largest single-week record since June 2021. This directly drove the total net inflow into global stock funds to $50.99 billion, the highest level since September 23.

Meanwhile, U.S. and Asian stock funds recorded net purchases of $6.6 billion and $6.15 billion, respectively.

The preference of funds for the European market is visually reflected in the stock indices. The European STOXX 600 index hit a historic high of 666.58 points on Thursday, buoyed by strong earnings from UniCredit Bank of Italy, Siemens Energy's robust profit margin forecast for 2027, and the optimistic earnings outlook for U.S. cloud service newcomer CoreWeave (CRWV.US).

In sector funds, technology, healthcare, and financial sectors attracted net inflows of $2.62 billion, $833 million, and $820 million, respectively, while the industrial sector faced a net outflow of $1.07 billion.

Bond and Money Markets "Bleed", Gold Remains Hot

In the fixed income market, global bond funds experienced a net outflow of $507.89 million, ending a streak of seven weeks of inflows. Among them, government bond funds, which saw a net inflow of $5.17 billion last week, turned to a net outflow of $488.8 million this week. Investors withdrew $1.72 billion from dollar-denominated global bond funds while purchasing $2.07 billion in corporate bond funds.

Money market funds, after a significant net purchase of $174.22 billion last week, faced a net outflow of $37.48 billion this week.

In commodities, gold and other precious metal funds maintained high popularity for the second consecutive week, attracting a net inflow of $614 million; energy funds also received a net inflow of $215.43 million, extending the recent streak of net purchases to four weeks.

Additionally, emerging market stock funds attracted a net inflow of $4.65 billion, marking the largest single-week inflow in three weeks. However, emerging market bond funds faced a net outflow of $657.44 million, marking the third consecutive week of capital outflow.

Bank of America: Bearish Talk, but Buying in Reality

The ongoing trend of global funds flowing into the stock market has also been confirmed by Bank of America strategists. Led by Michael Hartnett, the team pointed out in their report that year-to-date inflows into global stock funds have reached an all-time high, with few investors willing to short the market significantly.

On an annualized basis, inflows into global stock funds have reached $1.4 trillion. Specifically, U.S. stock funds attracted $656 billion, tech stock funds attracted $222 billion, and South Korean stock funds saw inflows of $78 billion.

"The support of fund inflows for the stock market is impressive, but it also indicates that while many investors are bearish in sentiment, very few are willing to act on it by actually shorting or underweighting," the strategists stated.

So far this year, the MSCI All-Country World Index has risen by 10%, while tech-heavy indices like the Nasdaq 100 and South Korea's Kospi have risen by 12% and 25%, respectively.

However, as doubts about the returns on AI investments have emerged, coupled with high oil prices raising inflation expectations, driving bond yields higher and shifting monetary policy to a hawkish stance, these tech indices have recently faced sharp corrections.

Hartnett noted that risk assets have struggled over the past six months, "because bullish positions have collided with tightening policies." Some assumptions from the summer have proven incorrect, including that the Federal Reserve would not raise interest rates and that the Democrats would not achieve a significant victory in the midterm elections, making expectations for economic prosperity the "last standing bullish belief."

The Bank of America team stated that despite U.S. households' stock wealth shrinking by about $3 trillion over the past month, this figure has still increased by about $19 trillion since Trump took office in January 2025. They pointed out that when the wealthy feel financially secure, and personal consumption accounts for about 70% of the U.S. economy, "it is hard to see an economic recession."

Additionally, the 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 such as Taiwan's establishment of a $15 billion market stabilization fund, and similar measures taken by South Korea and China to curb recent sell-offs.

However, Bank of America strategists currently maintain a "risk-off" stance until the interest rate hike cycle ends and the financial environment becomes more accommodative. In their view, this requires three conditions to be met: U.S. crude oil prices falling below $70 per barrel, the dollar reversing its recent appreciation trend, and the 10-year U.S. Treasury yield falling below 4.5%.

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