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Investors poured $18.1 billion into equity funds in the week to
Wednesday, BofA's weekly flow data showed, taking inflows in the
last six weeks to a record $140 billion as major vaccine
breakthroughs raised hopes that economies could move closer to
normality in 2021.
The risk-on sentiment is further supported by the accommodative
policies at central banks, which have been purchasing assets at
$1.3 billion per hour.
"Central banks have never been this dovish at this level of
asset prices and valuation," BofA said, citing soaring valuation
at MSCI's gauge of stocks across the globe. At 25.3 times
forward earnings, the index's valuation has been hovering close
to March 2000 levels.
In the week to Wednesday, emerging market stocks attracted $3.9
billion, a fifth week of large inflows as investors prepare for
"the year of vaccine", according to BofA's note to clients.
The U.S. investment bank said its clients with assets under
management of $2.9 trillion had allocated 61.5% to equities,
just short of the 62.5% record nearly six years back.
BofA said its closely watched 'Bull & Bear' indicator -- a gauge
of market sentiment -- was fast approaching "extreme bullish"
levels jumping to 6.6 from 4.7 in just two weeks. The indicator
runs from zero, indicating extremely bearish and "buy", to 10,
signalling extremely bullish and "sell".
Some $28 billion going into cash in the latest week was another
sign of caution before Christmas break.
For a graphic on RSI levels at overbought territory:
https://fingfx.thomsonreuters.com/
gfx/buzz/qzjpqdqolvx/Pasted%20image%201607347564147.png
(Reporting by Thyagaraju Adinarayan; Editing by Dhara Ranasinghe,
William Maclean)
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