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Global Equity Funds Record Biggest Inflows Since 2005

Fed Chairman Ben S. Bernanke
Fed Chairman Ben S. Bernanke said Sept. 18 that a decision on slowing the pace of asset purchases would depend on economic data, and that the Fed has no set timetable. Photographer: Pete Marovich/Bloomberg

Global equity funds attracted the largest inflows since at least 2005 in the week ended Sept. 18 as investors piled into stocks before the Federal Reserve’s decision to maintain monetary stimulus.

The funds lured a net $25.9 billion in the period, Wei Liang Chang, a foreign-exchange strategist at Australia & New Zealand Banking Group Ltd., said by phone from Singapore today, citing data from EPFR Global. Developed markets posted $24.3 billion of inflows, while emerging-nation funds drew $1.6 billion, according to Chang.

The MSCI All-Country World Index climbed to the highest level since 2008 on Sept. 16 after Lawrence Summers withdrew his bid to become the next Fed chairman, easing concerns that he would curtail monetary stimulus. The gauge extended gains after the U.S. central bank unexpectedly maintained its $85 billion monthly bond-purchase program two days later.

“People will find some space to breathe at this point,” Wellian Wiranto, an investment strategist at the wealth-management unit of Barclays Plc, which oversees about $217 billion worldwide, said from Singapore today. “In the coming week, we see further inflows given appetite has stabilized quite significantly and tapering was postponed.”

Taper Timing

Fed Chairman Ben S. Bernanke first signaled on May 22 that policy makers could reduce the bond purchases, triggering capital outflows from emerging markets and a month-long selloff in global equities. More than $50 billion left global funds investing in developing-nation bonds and stocks, according to EPFR Global.

Bernanke said Sept. 18 that a decision on slowing the pace of asset purchases would depend on economic data, and that the Fed has no set timetable.

“It’s hard to see the Fed start to taper at the next meeting in October,” said Wiranto. “If they really want confirmation of a recovery, one or two data points won’t do it for them.”

The MSCI All-Country World Index slipped 0.1 percent to 389.77 at 4:58 p.m. Hong Kong time, paring a third straight weekly gain to 2.6 percent. The measure has added 15 percent this year and trades at about 14 times projected 12-month earnings, the highest level on a weekly basis since April 2010.

The MSCI Emerging Markets Index also lost 0.1 percent, trimming this week’s advance to 3.5 percent. The gauge has declined 3.3 percent this year and is valued at 11 times forecast profits, the highest level since March, according to data compiled by Bloomberg.

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