Why Germany Is Particularly Vulnerable To A Sharp Reversal Right Now

German ETFs saw enormous fund flows in the most recent week ending May 12th. Either it was a flight to perceived quality in European stocks, says EPFR.

Just beware that this trend could reverse sharply:

EPFR:

Europe Equity Funds absorbed a net $4.7 billion, their highest weekly tally since EPFR Global started tracking them, but the huge flows into Germany ETFs obscured outflows of over $1 billion from the Europe Regional and Europe Regional ex-UK Equity Funds. It may be a flight to quality within the Eurozone, noted EPFR Global Senior Analyst Cameron Brandt. But past flows into these ETFs dedicated to Germany have tended to be short-term positions that reverse themselves, often within a couple of weeks.

EPFR’s chart is below, the risk they highlight is especially the case right now given that European markets have tanked.

Chart

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