'War Aftermath' Record Inflows of Funds into Gold-Related Products

Net Inflow Volume of 13.8 Trillion Won in March

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Byunghee Park] Major foreign media reported on the 7th (local time) that the net inflow of investment funds into gold-related products last month reached an all-time high.

According to BlackRock, the world's largest asset management company, the net inflow of investment funds into gold-related products last month was $11.3 billion (approximately 13.8165 trillion KRW). This surpassed the previous record of $9.4 billion set in July 2020, when concerns about the spread of COVID-19 were high.

The war triggered by Russia's invasion of Ukraine on February 24 caused a large amount of funds to flow into gold, a safe-haven asset. The investment amount in March increased fivefold compared to February. As a large amount of investment poured in, the price of gold nearly reached an all-time high in early March.

On the other hand, investors withdrew large amounts of funds from the stock market, mainly in Europe.

In the Europe, Middle East, and Asia (EMEA) region, equity funds saw an unprecedented outflow of $5.5 billion during March. In January of this year alone, EMEA equity funds had an inflow of $6.1 billion, the largest since 2015, but most of those funds have effectively been withdrawn.

Karim Cheddid, head of EMEA investment strategy at BlackRock, said, "Funds have been flowing out of European stocks for eight consecutive weeks," adding, "This is the longest period since October 2020." He explained that European equity funds experienced a reflation rally last year due to confidence that the European economy would grow after the COVID-19 pandemic, and that this trend continued into early this year, but the war changed the sentiment.

Reflation refers to a phase in which the economy escapes deflation and monetary expansion occurs without causing severe inflation.

Cheddid said, "With the outbreak of war in Europe and soaring energy and food prices, European investors are raising their hands," explaining, "Europe faces a greater risk of stagflation than other advanced markets and is more vulnerable to energy price shocks." He predicted that investor sentiment would be unlikely to recover until the peak of inflation is confirmed.

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