Big investors fleeing risk

LONDON (Reuters) -- Big-money institutional investors have turned more risk averse than at any time since August last year, taking positions they typically do not reverse quickly, State Street data showed Friday.

The U.S. financial services firm said its clients, who keep some $13.04 trillion with it as a custodian, have moved into what it called a "safety first" regime.

This is characterized by moving from emerging to developed market equities, embracing bonds and unwinding currency "carry" trades.

Institutional investors tend to take a longer-term view of markets than other investors, so shifts in their strategy can have a significant impact on a market's recovery.

The firm said that since September last year investors had been taking positions reflective either of abundant liquidity or leverage opportunities.

"A quick move back to risk-seeking is unlikely given ... previous history ... and the backdrop of markets," State Street said in a note.

Specifically, the latest data showed risk averse moves such as a sharp fall in demand for emerging Asian equities.

State Street said that a month ago, flows into emerging Asia equities were in the 65th percentile, meaning that they had been larger on only 35 percent of occasions over 10 years.

In the latest data, however, they were in the 5th percentile - almost the lowest level of demand seen since it started collecting data.

Similarly, institutional investors have been unwinding the carry trades in which they have borrowed in low-yield currencies such as the Japanese yen to invest in assets in higher-yielding currencies.

The latest data showed flows into yen rising. A month ago, they were in the 13th percentile. This rose to the 39th percentile in the latest report.

State Street said the risk-averse moves may reflect not just a search for safety but a cashing-in of winning trades.

It also noted that "safety first" was not the most risk-averse regime that it uses to characterize its clients' actions.

That would be what it calls "riot point" and is marked by indiscriminate equity selling.

Comments

Post a Comment

Popular posts from this blog

US Quake Test Goes “Horribly Wrong”, Leaves 500,000 Dead In Haiti

By: Sorcha Faal, and as reported to her Western Subscribers A grim report prepared by the Russian Northern Fleet for Prime Minister Putin is stating today that the catastrophic earthquake that has devastated the Island of Haiti was the ‘clear result’ of a United States Navy test of one of its ‘earthquake weapons’ planned to be used by the Americans upon the Persian Nation of Iran but had gone ‘horribly wrong’. The Northern Fleet has been monitoring US Naval movements and activities in the Caribbean since 2008 when the Americans announced their intention to re-establish their Forth Fleet that had been disbanded in 1950, and which was responded to by the Motherland when later that year a Russian flotilla led by nuclear powered cruiser Peter the Great began their first exercises in this region since the ending of the Cold War. Though virtually unknown to the American people, the use, and perfection, of earthquake weapon technology has a decade’s long history that began with the former Sov
Read more

I'm an accountant, I hate my job, but seriously, I wouldn’t know what else to do

I was born to be a lot of things, but being an accountant isn't one of them. In my heart of hearts I have always known this, but for some stupid subconscious reason, I have always ignored it. Why? Well...um...err...I didn’t know what else to do. How many people faced with the same predicament of deciding on a profession upon graduating used “not really knowing what to do” as their guiding compass? Blink. Ten years have passed and you’re left wondering, how did I get here? In this cubicle? Doing something I cannot stand (and I’m not even honestly good at), with people I quite frankly don’t really care about? For me that was accounting, a profession that conjures numerous clichés, such as boring, bean counting, personality not needed, number crunching etc etc. These have now evolved and have been replaced by repetition, reconciliations, long hours, fudging figures, high turnover, Enron and even more reconciliations. R-E-S-P-E-C-T But please don’t get me wrong, I have the utmost respe
Read more

Have We Reached a Top?

By James Kostohryz It's never been my position that the flow of fundamental news would turn from positive to negative overnight and in a total fashion. The world simply doesn't work that way. When I terminated my core long position a couple of weeks ago for reasons explained in�Ten Reasons the Countertrend Rally May Be Over,�I outlined a series of factors I believe may manifest in the later half of 2009 and the first half of 2010. Indeed, most of these factors will be more back-end loaded, as negative factors tend to build on one another and gain momentum in time through the medium of psychology and social mood. It's my view that the flow of economically relevant events�-- and perceptions of these events --are in the early stages of a transition. In this case, a transition means the flow of relatively good news will tend to wane somewhat while there's an uptick in relatively bad news. This is what one would expect at a top. However, it's to be expected that during t
Read more