Investors withdraw money from equity funds because of war in the Middle East
Worldinvestors began to reduce investments in equity funds – for the first time in the last eight weeks. The reason was growing geopolitical risks in the Middle East and fears of accelerating inflation, according to Logos Press.
The strongest outflow of funds was recorded from U.S. funds. According to Reuters, for the last week investors withdrew about $21.9 billion from them – this is the largest figure since January. In general, global equity funds ended the week with a net outflow of about $1.44 billion.
Analysts attribute the change in market sentiment to the increased tension between the U.S., Israel and Iran. Expansion of the conflict geography has increased investors’ fears of a possible jump in oil prices and new inflationary pressure on the global economy.
Against the backdrop of these risks, global stock indices are showing a decline. Thus, the MSCI World Index is preparing to end the worst week since April 2025, having lost more than 2.5%. Investors also put into prices the probability that central banks may postpone interest rate cuts.
Dynamics by regions turned out to be heterogeneous.
European equity funds continued to attract funds, but the inflow slowed to $8.8 bln vs. almost $12bln a week earlier.
Asian funds, on the contrary, demonstrated stability: net inflow of funds amounted to $7.43 bln.
Outflow from precious metals funds exceeded $2.5 bln
In terms of industry, investors began to look for protection in companies of the real sector of the economy. Industry (about$2.53 bln) and energy ($1.21 bln) received the largest inflow of funds.
At the same time, the financial sector was under the pressure of sell-offs – about $1.9 bln was withdrawn from the relevant funds.
An unexpected trend is the sell-off of funds related to gold and precious metals. Despite the growth of political tension, investors withdrew$2.62 bln from such funds.This fact is explained by profit taking after the previous growth of prices for precious metals.
Experts note that further market dynamics will largely depend on the development of the situation in the Middle East and expectations regarding the monetary policy of the world’s largest central banks.
