Coronavirus & Huge ETF Outflows | The Corona Correction | Refinitiv
Roger Hirst: Welcome to the Corona Correction Series in association with Refinitiv. I'm your host, Roger Hirst. We've just seen the fastest ever 10% decline from an all-time high on the S&P500. Before from peak to trough was about 15% in seven days. But that sort of volatility can drastically impact investor attitudes. Markets fell, but did we see investors react by pulling serious funds from the market? Earlier, I spoke to Refinitiv Lipper Fund flow specialist Pat Keon to see where the big flows were taking place and how this compares to previous periods of market stress. Pat Keon: Well, we saw a huge negative impact from the threat of the virus, both both in the U.S. equity markets and as well, with the fund flow activity for equity ETFs and net outflows of roughly $18 billion last week. This was the fifth worst weekly net outflow in history for the assett group. Equity markets in the US had their worst week since the global financial crisis in 2008 last week due to the reaction to the market. The largest outflow came from the Spyder S&P 500 ETFs which had about 14.5 Billion dollars leave its coffers. The other the other large outflows we saw was the I Shares MSCI Emerging Market ETF. At this point it has over 50% of its assets in China region stocks. They had over a billion dollars leave their coffers. And then the next following on, the third largest then outflow belonged to the I Shares MSCI Japan ETF, which as we know Japan has been heavily impacted as well. Is it a one off? I mean the Fed moved earlier this week, yesterday in fact, cut interest rates 50 basis points, trying to stabilize things in the US. And I don't think we have any stabilization seen stabilization here yet. So I wouldn't be surprised if we saw some more huge net outflows coming up. Roger Hirst: So there you have it. Investors were in no mood to hang around picking the most liquid ETF, tracking the S&P 500 in order to swiftly pull funds from the market. But it doesn't feel like this was the capitulation that marks a low in sentiment. Volumes on the tech heavy Nasdaq were high. But actual fund liquidation was relatively low. For a better sign of a tradable bottom, what we really need to see is capitulation across the tech sector, which led the market higher over the previous 12 months. We'll see you tomorrow with another update.