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The stock market exodus is accelerating

Feb 19, 2016, 21:43 IST

Bank of America Merrill Lynch

The exit from the stock market is picking up speed.

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That was driven by dramatic outflows in Europe, which saw $4.2 billion in outflows, the most since October 2014. US equity funds saw $6 billion in outflows.

The outflows are closer to "capitulation" levels, Bank of America's analysts write. Capitulation is where cumulative outflows represent a significant chunk of total assets under management.

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There have been $53 billion in outflows from equities over the past seven weeks, according to the note, ahead of the $36 billion in outflows during the August 2015 sell-off.

The cumulative outflows are now approaching the bear market levels set during the August 2011 debt ceiling drama ($80 billion), the 2008 financial crisis ($85 billion) and the 2002 bear market ($65 billion).

Money is leaving the stock market and heading for safe assets, such as government bond funds, which saw $1.6 billion in inflows, and precious metal funds, which saw $1.6 billion in inflows.

Markets have bounced back in the past few days, though Bank of America argues that is the result of a "short squeeze in stocks and credit."

It added that cash levels are at their highest since November 2011, ahead of a "massive month of policy events", including G20, European Central Bank, Bank of Japan and Federal Open Market Committee meetings.

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