Investors fleeing UK equity funds – data

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Net outflows exceeded $26 billion this year, according to EPFR Global

UK stocks suffered record annual outflows in 2022 as investor confidence in the country’s economy is waning, Bloomberg reported on Friday, citing data from EPFR Global.

Statistics show that some $26.3 billion has been withdrawn so far, which coincides with a slump of 20% for the FTSE 250 Index. The benchmark index was down by the most since 2008. Meanwhile, the blue-chip FTSE 100 Index was up more than 1%, largely due to its exposure to commodity stocks that soared this year.

The record equity fund outflows marked the seventh year in a row that investors have been turning away from UK markets, according to Bloomberg.

“The country has been roiled by political and economic troubles this year,” the outlet wrote, specifying that “The onset of a recession, inflation at a 41-year high, two prime ministers resigning and the highest number of strikes since the 1980s helped trigger selloffs in domestic stocks and the pound.” All that has resulted in London losing its crown to Paris as Europe’s biggest stock market, the report said.

A senior strategist at State Street Global Markets, Marija Veitmane, told the media outlet she is less optimistic about UK stocks in 2023 as “we expect the market focus to switch from macro headwinds to microeconomics and earnings recession.”

“The UK is less likely to do well, as earnings and profitability of UK companies are not the strongest, which may lead to underperformance,” she added.

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