Market volatility took its toll on exchange-traded products (ETPs) in the last week of February, as investors rushed to pull out cash from the investment vehicle over coronavirus fears.
Global flows into ETPs totalled $28.4 billion (€24.9 billion) for the whole month – a decrease of 42% from January when investors added $67.3 billion.
This reduction of overall flows was driven by large redemptions in the last week of the month, when news broke that the coronavirus had spread to more countries causing panic and turmoil in global markets.
In the last week of February alone, investors sold $31.5 billion of equity ETPs and $6.2 billion of fixed income ETPs, according to the latest figures from US fund house BlackRock. It was the worst week of outflows since records began, the firm said.
Commodity ETPs were the only asset class that gathered inflows during the last week of February, with $1.8 billion of new cash – the majority of which was allocated to gold ETPs.
Meanwhile on Monday, as global markets plunged after a breakdown of the alliance between Opec and Russia, and ongoing coronavirus woes, China stocks began to show a level of resilience.
The Shanghai stock exchange was least affected by the rout, shedding only 3% in value, and gaining 1.8% on Tuesday as markets elsewhere also showed signs of recovering from the worst drop seen in share prices since the financial crisis.
According to Hong Kong asset manager Value Partners, Chinese shares are starting to look “healthy” despite the disruption caused by the coronavirus outbreak.
Investment director Man Wing Chung said on Tuesday: “It seems as though China’s financial markets are beginning to recover from the coronavirus outbreak and Chinese stocks are performing well compared to their U.S. counterparts.”
“This is largely due to U.S. investors experiencing an initial period of panic which China has already overcome and we’re hoping that the worst may be over,” he added.
Nigel Green, chief executive of financial advisory group deVere, said he expects global markets to recover “significantly” before the year end.
“The stimulus packages within major economies, together with the practical measures being taken to limit the spread of coronavirus – such as Italy’s Prime Minister Giuseppe Conte placing the entire country on lockdown – plus China signalling that the outbreak has peaked with a visit to Wuhan by President Xi, will serve to calm markets,” he said.
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