AI Boom Reinvigorates Global Flows into Equity Funds

SadaNews Economy - Global investors returned to equity funds after a week of outflows, driven by a revival in AI companies' stocks, although caution over peace negotiations between the United States and Iran limited the pace of buying.

Data from "LSEG" showed that investors pumped a net $457.57 million into global equity funds during the week ending May 27, compared to outflows of $6.56 billion in the previous week, according to "Reuters."

The "MSCI" World Index rose to a record high of 1129.06 points on Friday, supported by market optimism after the extension of the ceasefire between the U.S. and Iran, pending final approvals.

Technology stocks contributed to increased risk appetite, after "Nvidia" indicated continued strong demand for AI chips.

Geographically, U.S. funds recorded inflows of $1.97 billion, compared to outflows of $12 billion in the previous week.

The results of "Nvidia", highlighting continued strong demand for AI chips, bolstered interest in technology sector funds, which recorded inflows of $2.75 billion to maintain gains for the eighth consecutive week. Financial and industrial sector funds attracted inflows of $987 million and $880 million, respectively.

In the fixed-income markets, U.S. bond funds continued to attract inflows for the sixth consecutive week, with a net of $10.62 billion, supported by demand for short- and medium-term debt instruments, including government bonds and municipal debts. U.S. money market funds recorded inflows for the second consecutive week of $8.38 billion, as investors continued to shift towards safer instruments amid market uncertainty.

European funds recorded inflows of $678 million, while Asian funds experienced outflows of $3.92 billion.

In terms of sectors, sector funds attracted a net inflow of $5.14 billion, led by technology at $4.98 billion and financial services at $1.05 billion.

In the bond markets, global funds continued to achieve gains for the eighth consecutive week with a net inflow of $18.15 billion, with demand focused on short-term bonds, euro-denominated bonds, and corporate bonds.

Conversely, money market funds recorded outflows of $4.46 billion, while precious metals funds, including gold, experienced a net outflow of $584 million, marking the fourth week of decline in five weeks.

In emerging markets, equity funds continued to record outflows for the fifth consecutive week, totaling $4.45 billion, alongside $1.08 billion exiting bond funds, according to data covering 28,882 funds.