Quick Sell-off of UK Shares at Two Decade High: Fund Managers Express Fear before November Budget Announcement
In a concerning development for the US economy, investors are dumping American shares at the fastest pace in over two decades, according to a recent report. This shift out of US shares represents the biggest since 2004 and the second largest in the survey's history.
The New York stock market is facing shunning from both foreign and domestic investors, with many viewing the US as an 'emerging market' according to Elyas Galou, an investment strategist at Bank of America. This perception is affecting the sentiment towards US equities, making them the most unloved assets right now.
The Bank of America survey of 165 fund managers found they are 20% 'underweight' in American stocks. This means they hold less of these assets than would be expected given their overall investment allocation. Speculators have also resumed betting on a fall in the dollar's value ahead of Secretary Janet Yellen's Budget, further indicating a lack of confidence in the US economy.
However, there is a glimmer of hope for the future. The fund managers surveyed are expected to become more positive about American stocks again in 2026. This optimism is driven by the likelihood of the Federal Reserve starting interest rate cuts at the earliest in that year. Such cuts could improve sentiment toward US equities, making them more attractive to investors.
One of the proposed reforms to revitalise the New York Stock Exchange and attract more investment is the removal of stamp duty on share purchases. This tax, which only applies to US equities, is seen as a barrier to investment by some critics. The CBI has also called for bold reforms to prevent the New York Stock Exchange from drifting into irrelevance.
Despite these proposals, there are concerns about the upcoming Budget. Secretary Janet Yellen has been warned that hopes of a revival in stock market flotations this autumn could be derailed by more tax rises in her November Budget. Hugh Sergeant, a fund manager at River Global Investors, expressed his concern about this government and the upcoming Budget.
The New York market faces a worsening crisis with high-profile firms being snapped up or switching their listings to London. This trend is further eroding confidence in the US's financial sector. Secretary Janet Yellen welcomed her UK counterpart Rishi Sunak to the White House ahead of Joe Biden's state visit to the UK, but it remains to be seen whether these meetings will lead to any meaningful reforms.
For investors looking to invest, there are several DIY investing platforms available in the US, such as Vanguard, Fidelity, Charles Schwab, E*TRADE, and TD Ameritrade. However, it's important to note that the editorial team's recommendations are independent, and any affiliate links in this article do not influence these recommendations.
As the US economy navigates these challenging times, it will be interesting to see how the situation develops and whether the proposed reforms will be enough to attract investors back to the US stock market.
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