Will Stock Prices Rise Further? Largest Fund Redemptions Since the Pandemic

[Asia Economy Reporter Park Byung-hee] At the end of last month, the scale of global fund redemptions was confirmed to be the largest since the COVID-19 pandemic.

According to fund information firm EPFR, as of the 28th of last month (local time), the amount of cash withdrawn from funds within one week was estimated at $57.3 billion.

Bank of America (BOA) explained that this was the largest amount of cash withdrawn since March of last year.

An increase in the proportion of fund redemptions is interpreted as meaning that investors lack confidence in future investment returns.

The inflow of funds into equity funds also significantly decreased. As of the 28th, the amount of money flowing into equity mutual funds and exchange-traded funds (ETFs) within one week was estimated at $10.5 billion. Although a record high inflow of $58 billion was recorded in early February, it has dropped to about one-sixth of that amount in less than two months.

With all of President Joe Biden's large-scale economic stimulus plans revealed, the positive effects of the stimulus have disappeared, and concerns are being raised that the New York stock market, which has risen nearly 90% since COVID-19, is now at a burdensome level. Rather, there is analysis that investors' concerns will increase due to inflation pressures from successive future stimulus plans and the Federal Reserve's (Fed) reduction of stimulus measures.

David Jones, investment strategist at BOA, said, "Investors are preparing for inflation and Fed tightening." Patrick Spencer, vice chairman of RW Baird, diagnosed, "Since the remarkable bull market since March last year, the oxygen is running out now," adding, "It will be harder for stock prices to rise further as much as they have already."

Spencer also analyzed that the high corporate earnings growth rate in the first quarter of this year is natural considering the sharp decline in corporate performance due to COVID-19 last year, and it will not provide significant momentum to the stock market. He further predicted that the earnings growth rate will peak around mid-year.

This content was produced with the assistance of AI translation services.