U.S. Stock Fund Inflows Reach 11-Month High, EPFR Global Says

By Shiyin Chen

Nov. 13 (Bloomberg) -- Investors poured the most money into U.S. stock funds in 11 months, leading global equity inflows amid a recovery in earnings and on expectations the Federal Reserve will keep borrowing costs low, EPFR Global said.

Investors funneled $6.97 billion into U.S. equity funds, the most since the second week of December 2008, contributing to total inflows of $10 billion to stock funds during the week ended Nov. 11, EPFR said in a statement dated yesterday. It added that funds investing in China shares took in $256 million, the most in nine weeks, pacing a $2.46 billion gain in overall emerging-market stock investments.

The Standard & Poor’s 500 Index and the MSCI Emerging Markets Index both gained 5 percent during the week, helped by pledges by the Group of 20 nations to maintain their stimulus measures. Cisco Systems Inc. and HSBC Holdings Plc were among companies that rose after reporting earnings.

“There’s going to be a slow but steady recovery,” Richard Lacaille, global chief investment officer at State Street Global Advisors, which oversees $1.74 billion in assets, said in a Bloomberg Television interview in Hong Kong. “We’ve gone through the bottom, earnings have troughed, we now face growth.”

Policy makers from the U.S. to Japan said at the G-20 meeting last week it’s too early to withdraw fiscal steps designed to support global recovery. The Fed also said on Nov. 4 it will keep interest rates near zero for “an extended period.”

Cisco, China

Cisco, the world’s largest maker of networking equipment, reported profit excluding stock compensation and some other costs of 36 cents last week, beating the 31-cent average estimate in a survey of analysts. HSBC, Europe’s biggest bank, said third-quarter profit was “significantly” higher than a year ago on lower loan provisions.

China equities gained as economic data showed the nation’s recovery strengthening. Industrial production rose 16.1 percent in October, the most since March 2008, the statistics bureau said on Nov. 11. Retail sales gained an annual 16.2 percent during the month, while urban fixed-asset investment climbed 33.1 percent in the first 10 months of the year.

“In addition to being seen as a haven from dollar weakness, emerging markets benefited during the first full week of November from some robust Chinese macroeconomic data showing GDP growth on track to exceed 10 percent during the fourth quarter of 2009,” said EPFR, which tracks funds with $10 trillion in assets.

Developing Markets

Global emerging-market stock funds drew $1.48 billion, while Asia took in $630 million, Cambridge, Massachusetts-based EPFR said. Latin America and developing Europe, the Middle East and African stock funds also attracted a combined $350 million, it said.

Funds investing in the BRIC nations of Brazil, Russia, India and China also had a ninth straight week of inflows, taking in $224 million, according to the statement. Total inflows for the year have reached a record $66.4 billion, according to estimates by Morgan Stanley.

“In emerging markets, you’ve got a secular growth story and a lot more robustness in terms of growth,” Lacaille said.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net