Investment funds view Europe with suspicion and accelerate sales to protect their assets. According to the latest data from Bank of America, investment funds have been withdrawing capital from the old continent for three weeks. Just this week, these vehicles they would have taken out more than 1,200 million of euros.
This contrasts with a year in which it seemed that investment was exploding due to the promise of stimulus and economic recovery and, until now, these funds had bet on the region by buying more than 9,000 million euros in 2021. All this, in the final stretch of a 2021 that was promised as the year of Europe. Numerous analysts, such as those at Goldman Sachs, pointed to the region’s possibilities for investors in the face of expensive Wall Street.
This withdrawal for more than three weeks coincides with a clear crisis with supplies, in which the eurozone countries are the weakest link. Your industries depend on Asian imports to continue operating, but these products are increasingly expensive to bring and production often has to be delayed.
This has been the case in the automotive industry, with companies such as Mercedes Benz delaying deliveries for up to a year. Seat has also delayed orders in addition to agreeing an ERTE until June 2022. Renault has also used this measure at its plants in Valencia, Valladolid and Seville.
Energy companies are the ones that are reinforced the most despite the regulatory crisis with the electricity bill
The industrial sector (which includes this and others such as the steel industry, also affected by bottlenecks and the supply crisis) is one of those that experiences the most the exodus of capital from investment funds, with more than 300 million out in the last week.
In addition, the prospect of an era of inflation and the arrival of the beginning of the end for the stimulus of the European Central Bank, represent a turning point for the cyclical companies like the industrial ones, which could be affected by this new context.
On the other hand, the crisis caused by the rise in the price of electricity, a problem that is widespread throughout Europe. It has set off the alarms, however, the funds have been reinforced with 100 million in this area, being the one that rises the most.
Despite the prospect of new policy measures that hurt power companies, investors believe these values will rebound and do not want to miss the rebound. Regulatory uncertainty it still runs through Europe but the fear of inflation and the withdrawal of stimuli makes these companies a safer asset.
Record in UK
But if the crisis has a clear name, that is the United Kingdom. The British are the ones who, with Brexit and isolated, bear the worst of the complicated situation that the continent is experiencing. Not surprisingly, September has been the second worst month on record in terms of capital outflows by funds. With 563 million pounds withdrawn (560 million euros), it stayed close to the 673 that left in June 2020, record in the whole record de Calastone Fund Flow.
However, September has not been the end for the exodus from the United Kingdom, which is the country where the most money has been withdrawn in the last week. More than 512 million pounds (603 million euros) in just seven days that put everything in favor so that October reaches the largest flight of capital from funds.
The London Stock Exchange has better figures than the Ibex 35 or the pan-European stock market
Despite the shortage problems, the country’s main index remains stable. The FTSE 100 rose over 1% last week and it takes a month with a revaluation of 2.24%. Figures better than those of the Ibex, which rose 2% or the selective pan-European EuroStoxx 50, which fell 1.55%.
However, funds are bracing for potential impact and are widely withdrawn from the country. Waiting for that blow in its logistics line to transform into a decline in the markets.