Why Are Investors Pulling Money Out Of Global Stock Funds At The Fastest Pace Since The Last Financial Crisis?
By Michael Snyder
TheEconomicCollapseBlog.com
July 2, 2018
We haven’t seen anything like this since the financial crisis of 2008. Investors are taking money out of global stock funds at a pace that we haven’t seen in 10 years, and many believe that this is a harbinger of tough times ahead. Global stocks lost about 10 trillion dollars in value during the first half of 2018, and an even worse performance during the second half of the year will almost certainly push the global financial system into panic mode. U.S. stocks have been relatively stable, and so most Americans are not too alarmed about what is happening just yet. But if you look back throughout history, emerging market chaos is often an early warning signal that a major global crisis is on the horizon, and that is precisely what is happening right now. Financial markets in emerging markets all over the planet are in the process of melting down, and the losses are becoming quite dramatic.
As stock prices around the planet start to plummet, investors are pulling money out of global stock funds very, very rapidly. The following comes from CNBC…
Investor money is hemorrhaging out of global stock funds at a pace not seen since just after the financial crisis exploded.
Global equity funds have seen outflows of $12.4 billion in June, a level not seen since October 2008, according to market research firm TrimTabs. Lehman Brothers collapsed in September of that year, triggering the worst economic downturn since the Great Depression and helping fuel a bear market that would see major indexes lose more than 60 percent of their value.
Does this automatically mean that another major financial crisis is on the way in the United States?
No, but it is definitely not a good sign.
As CNBC also noted, investors have been taking tremendous amounts of money out of one emerging market ETF in particular…
The iShares emerging market ETF has seen $5.4 billion in outflows in June, the most of any fund, according to ETF.com.
“U.S. dollar strength and persistent underperformance seem to be driving fund investors away from non-U.S. equities,” TrimTabs said in a note.
The list of emerging market economies that are in crisis mode is beginning to get really long. Argentina, Venezuela, Turkey, Brazil and South Africa are some of the more prominent examples.
If the chaos in emerging markets continues to intensify, the rush for the exits is going to become a stampede. Not too long ago, I discussed the fact that the “smart money” was getting out of stocks at a pace that we haven’t seen since just before the last financial crisis, and it isn’t going to take too much to set off a full-blown financial avalanche.
The Rest…HERE
