As the S&P 500 touched another record high last week, Bank of America’s clients continued to sell stocks, while etf net buys were hot especially in one sector, that’s according to the bank’s weekly Equity Client Flow trends report issued today.
The report notes that while net buys of ETFs for the week hit a four-week high, buying was offset by sales of single stocks Sales were led by institutional clients, who have sold stocks the last five weeks and are the biggest sellers of equities this year. Hedge funds were also sellers (for the third straight week), while private clients were net buyers for the second week (entirely due to ETFs).Clients were broad-based sellers of single stocks across ten of the eleven sectors last week – only Telecom stocks saw small inflows.
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Financial Sector Buybacks Hit Record
Corporate buybacks were the one strong point in the data (apart from ETFs). Buybacks by corporate clients decelerated to a 10-week low, but continue to track above typical September levels, which is reportedly one of the weakest months for buybacks.
Financials dominated the corporate buyback flow, and in fact, cumulative corporate client buybacks in this sector over the past 24 weeks are not only at a record high for the sector since mid-2009, but the second-highest for any sector over a 24-week period in the data.
Not only did Financials lead in buybacks, but they were also highly popular among clients. This was also the one sector ETF which saw inflows from all three client groups last week sector ETF net buys were the largest in Financials for the second straight week, where last week’s ETF net buys were the largest since February.
Across all sectors and client types, BoA clients have sold a cumulative $28.4 billion in equities this year, excluding ETF trades. Including ETFs, the flow has been positive to the tune of $7 billion. Retail clients have purchased a total value of $7.2 billion including ETF purchases, the most significant buying in history (data back to 2008):
“As for sectors, the more positive recent trends in Financials have not been limited to single stocks: sector ETF net buys were the largest in Financials for the second straight week, where last week’s ETF net buys were the largest since Feb. This was also the one sector ETF which saw inflows from all three client groups last week. We expect Financials could be one of the biggest beneficiaries if we see a rotation out of more crowded, expensive areas of the market, such as Tech. Both private clients and institutional clients continued to buy Tech ETFs, but hedge funds sales’ of Tech ETFs were the biggest since early Aug. Energy ETFs saw the largest net sales, and have the longest recent selling streak of the sector ETFs (for four weeks).”