The Zhitong Finance App learned that Bank of America's latest customer fund flow data shows that its customers bought US stocks for the second consecutive week last week. The capital inflow was the highest since mid-July, and became the bank's sixth largest single weekly net inflow since the bank began counting weekly data in 2008. Notably, this round of buying mainly comes from institutional investors and hedge funds, while private clients have been net selling US stocks for the sixth week in a row. At the same time, capital is being re-skewed towards growth sectors such as technology, indicating that risk appetite among large professional investors is picking up.
According to the data, Bank of America customers made net purchases of about 3.9 billion US dollars of individual stocks and also net bought about 3.1 billion US dollars of stock ETFs last week, with a total capital inflow of about 7 billion US dollars. The S&P 500 index rose only 0.1% during the same period, which means that large-scale capital purchases did not occur in the context of a clear surge in the market.
In terms of investor types, institutional clients and hedge funds have become the main driving force behind this round of capital inflows. In contrast, private clients continue to leave the market and have been net sellers of US stocks for the sixth week in a row.
There is also a clear divergence in capital flows between stocks with different market capitalization. Bank of America customers mainly buy large and mid-cap stocks, while continuing to sell small-cap stocks, showing that although investors increase their exposure to US stocks, they still prefer larger companies with relatively stable liquidity and fundamentals.
At the sector level, the trend of capital returning to growth assets is particularly evident. Bank of America customers made net purchases of individual stocks last week in 8 of the 11 major sectors of US stocks. Among them, the technology sector received capital inflows for the second week in a row. The rolling average capital flow of technology stocks over the past four weeks has remained positive since mid-July, indicating that the allocation of capital to the technology sector continues to improve. At the same time, the communications services sector also ushered in a net inflow of capital for the first time in five weeks. In stark contrast to this is the industrial sector. Bank of America customers have been net selling industrial stocks for the fifth week in a row, and capital outflows from the industrial sector ranked first among all industries last week.
Bank of America pointed out that industrial stocks had previously become a highly valued and crowded sector for trading. The previous week, the four-week rolling average capital outflow from the sector set a historical record, indicating that investors are withdrawing from previously higher industrial stock positions. The consumer-related sector is another major area with capital outflows, and the net buying trend of the previous week was reversed.
The ETF market also sends a signal that capital is shifting back to a growth style. Last week, customers bought value, growth, and hybrid ETFs at the same time. Among them, growth ETFs ushered in their first net purchase in five weeks. Judging from the market capitalization style, large stocks, medium stocks, and ETFs covering the overall market all received capital inflows, while small-cap ETFs continued to be sold.
However, the technology sector showed a notable divergence between individual stocks and ETF markets. Although customers have made net purchases of individual technology stocks, technology ETFs have instead become industry ETFs with the largest capital outflows. Meanwhile, out of 11 industry ETFs, 7 received net purchases from customers, with healthcare ETFs leading the way in capital inflows.
Overall, Bank of America's latest customer capital flow shows that there is an obvious reallocation of capital within US stocks. On the one hand, institutional investors and hedge funds have returned to the market in a big way, bringing the overall capital inflow to US stocks to a historically high level; on the other hand, capital did not fully pursue risk, but instead concentrated on growth sectors such as large stocks, mid-cap stocks, and technology, while continuing to avoid small-cap stocks and withdrew from the industrial sector where trading was crowded before.
What is particularly noteworthy is that private clients have been selling for the sixth week in a row, while institutions and hedge funds are actively buying, indicating that the attitudes of different types of investors towards the current US stock market are further divided.