Bloomberg: $27B stock exodus shows how investors feel about Europe

European stock funds just had a 16th week of outflows, Report informs via Bloomberg.

When it comes to Europe’s underperforming equities, investors are voting with their feet.

The region’s stock funds just suffered a 16th straight week of investment outflows, taking total withdrawals to $27 billion in the year to date, Bank of America Corp. strategists said in a note on Friday, citing EPFR Global data. In the past week alone, Europe had the biggest outflows among major regions with a $4.6 billion exodus.

The flows highlight how a rally in European stocks has petered out at a time when the Nasdaq 100 index is about to record its best ever first half of a year. The UK has been a particular laggard with the FTSE 100 little changed since the start of 2023.

The region’s underperformance partly reflects an increasing preference among investors for growth stocks and megacap technology, which have a much bigger weight in the US. The strength of the US economy is also likely to have also played a part amid fears of weakening global growth.

“Tech exposure is driving regional equity flows again, benefiting US equities and the dollar,” Barclays Plc strategist Emmanuel Cau wrote in a note this week, highlighting that Europe was the only major region to see outflows in June. “In contrast, US investors have started selling European equities for the first time this year, with the weakening in activity data prompting broader outflows from the region.”