European stock funds attract $5.2 billion in ninth straight week of inflows

NEW YORK (Reuters) – Investors worldwide poured $5.2 billion into funds that specialize in European stocks in the week ended March 11, data from a Bank of America Merrill Lynch Global Research report showed on Friday.

The inflows marked a ninth straight week of new demand for the funds, according to the report, which also cited data from fund-tracker EPFR Global.

The European Central Bank’s 1 trillion-euro government bond-buying program, which began on Monday, is spurring already surging demand for European equities as the euro weakens and European bond yields fall to record lows.

In its report, Bank of America’s Michael Hartnett and Brian Leung said investors have been rotating from U.S. assets to European securities. Hartnett and Leung noted that the U.S. dollar index is on course for a staggering 13.8 percent gain in the first quarter, the largest quarterly appreciation since the fourth quarter 1992 emerging market crisis.

“U.S. dollar spurring $47 billion redemptions from U.S. equity funds versus $36 billion inflows to European equity funds year-to-date,” they said. “Inflows to Europe strongly mimicking inflows to Japan after the BoJ (Bank of Japan) Quantitative Easing announced April 2013.”

Japanese stock funds worldwide, meanwhile, attracted $2.5 billion of inflows in the latest week, the biggest such move since October 2014, BofA added.

Stock funds overall posted $700 million in outflows, with U.S.-focused stock funds posting $7.5 billion in outflows.

Bond funds attracted $2.7 billion in inflows to mark their 10th straight week of new demand. Most of the investor appetite stemmed from investment-grade fixed-income funds worldwide, which attracted $3.6 billion in their 64th straight week of inflows.

At the other end of the credit spectrum, high-yield junk bonds worldwide posted net outflows of $600 million, their first cash withdrawals in seven weeks. Emerging market debt funds also saw net outflows at $600 million, their first net outflows in six weeks, according to the BofA report.

(Reporting by Sam Forgione- Editing by Bernadette Baum, Jennifer Ablan, Jonathan Oatis and Meredith Mazzilli)