LIVE MARKETS-BofA clients still fond of financial stocks

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BOFA CLIENTS STILL FOND OF FINANCIAL STOCKS

BofA Securities equity and quant strategist Jill Carey Hall says that last week, with the S&P 500 index .SPX sliding about 1.7%, clients were net buyers of U.S. equities (+$3.6B) for a fourth week in a row.

"Private clients were net buyers for the 11th consecutive week and institutional clients were buyers for the first time in five weeks; hedge funds (HFs) were sellers for the second week in a row," writes Hall in her note.

She adds that "private clients' recent buying streak is the longest of any start to the year in our data history, with inflows across most sectors (except Tech/Consumer)."

Corporate client buybacks slowed slightly week-over-week, but Hall says buyback executions so far this year have remained well above typical seasonal levels even with elevated multiples/rates.

In terms of S&P 500 groups, Hall says clients bought stocks across all but three sectors, led by tech (biggest inflows since December), financials (third-largest weekly inflow in BofA's data history since 2008), and consumer discretionary (biggest inflows since December).

Of note, financials have the longest recent buying streak of any sector, with inflows for the past seven weeks. BofA sees financials as benefiting from a sustained productivity cycle and deregulation, with the view that multiples don't seem to reflect this.

Industrials saw the largest outflows (9th largest in BofA's data history), and have seen outflows in seven of the last eight weeks. Utilities and materials also experienced outflows.

In terms of ETFs, Hall says clients bought fixed income and commodity ETFs, while they sold equity ETFs.

Growth/blend ETFs and large cap ETFs saw outflows, while value ETFs and mid/small cap/broad market ETFs garnered inflows.

Seven of the 11 sectors saw ETF outflows, led by financials ETFs, despite the group's big single stock inflows.

Tech and energy ETFs captured the biggest inflows.

(Terence Gabriel)

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