Global investors dumped equities in October on US election jitters

NEW YORK: Global investors pumped more money into debt funds and shed holdings of equity funds in October, data from funds database Lipper showed, confirming heightened worries over stock valuations in the weeks before the US presidential election. Data from Refinitiv Lipper showed that global debt funds received an inflow of $49 billion in October, compared with an outflow of $2.6 billion in equity funds.

Stock markets have rallied tentatively this week as markets await the results of the Nov. 3 elections. Early indications show Democrat Joe Biden closer to the presidency than incumbent Donald Trump and for Congress to stay divided.

The surge in inflows in bond funds was also due to a rise in US interest rates as yields climbed to a four-month high in the last month, analysts said.

Global equities have rallied since March, bolstered by government stimulus measures and hopes for a vaccine. But that surge in shares lifted the MSCI World index's forward price-to-earnings ratio to 18.3 at the end of October, much above the 10-year average of 14.4.

Apart from equity funds, money market funds also witnessed an outflow of $23 billion last month, after receiving a total inflow of over $1 trillion between March and April this year.