This week, global stock markets continued to &#34;bleed,&#34; while gold and bonds emerged as winners.
On the 29th, Bank of America strategist Michael Hartnett pointed out in the latest research report that by the end of May 2025, global stock markets recorded the largest weekly net outflow of funds this year, amounting to as much as $9.5 billion, while emerging market stocks saw a net inflow of $2 billion, the largest this year.
During the same period, the US dollar index continued to weaken (down 8.5% year-to-date), and funds in the global market clearly flowed into gold (with an inflow of $1.8 billion this week, an annualized record inflow of $75 billion), bonds (with an inflow of $19.3 billion this week), and cryptocurrencies (with an inflow of $2.6 billion this week, the largest since January this year).
Bank of America continues to recommend that investors adopt the &#34;BIG&#34; strategy (Bonds, International Stocks, Gold), while the barbell strategy composed of the &#34;Seven Giants + Global Value Stocks&#34; has also become an important means of hedging risks.
<h2>Global Fund Flows - Stock Markets &#34;Bleeding,&#34; Gold and Bonds as Winners</h2>
Bank of America pointed out that this week, global equity funds experienced the largest single-week net outflow since 2025, totaling $9.5 billion. Among them, ETFs (passive equity funds) saw an outflow of $3.2 billion, while actively managed funds experienced an outflow of $6.4 billion.
At the same time, bond assets continued to attract funds, recording inflows for five consecutive weeks, reaching $19.3 billion this week, with emerging market debt being a highlight, seeing an inflow of $2.8 billion, the highest since January 2023.
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Gold assets also benefited significantly. This week, gold funds received an inflow of $1.8 billion, with the overall annualized inflow reaching a record $75 billion, continuing to surpass other major asset classes. Cryptocurrencies, as an investment tool for the weak dollar trading theme, also received $2.6 billion this week, marking a new high since January. Fund outflows were not only seen in the stock market, but cash assets also saw an outflow of $18.9 billion.
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<h2>The US Dollar Enters a Bear Market, Asset Allocation Main Line Changes</h2>
The weakness of the US dollar drives asset rotation. Multiple asset inflows are related to the weakening dollar, including cryptocurrencies, gold, emerging market bonds and stocks, as well as real estate investment trusts, which saw a net inflow of $300 million, the largest since October last year.
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Bank of America believes the dollar is entering a bear market, with key reasons including: tariff policies failing to push the dollar index above 100, as a weak dollar will help revive U.S. manufacturing (which currently accounts for only 8% of jobs). Meanwhile, the policy shift following the peak of the Federal Reserve's independence will further support the dollar bear market and the bull market patterns for gold, emerging markets, and international stocks.
<h2>Emerging Market Stocks and Debt Attract Capital, Developed Markets Diverge</h2>
At the same time, emerging markets have become a highlight. This week, emerging market stocks saw a net inflow of $2 billion, marking the largest record this year. In contrast, the Japanese market experienced the largest single-week outflow of funds in history, totaling $11.8 billion. The U.S. stock market has seen outflows for two consecutive weeks, reaching $5.1 billion this week. European stock markets have recorded net inflows for seven consecutive weeks, totaling $1 billion.
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In detail, foreign capital has continued to flow into the U.S. stock market this year (annualized at $138 billion, the second highest in history), but the attitude towards U.S. bonds (government and corporate bonds) has been cautious, dropping from an inflow of $10 billion at the beginning of the year to &#34;net zero.&#34; Bank of America private clients have been continuously increasing their holdings in utilities, consumer staples, and low-volatility ETFs over the past four weeks, while reducing their positions in energy, high-yield bonds, and bank loan ETFs.
<h2>S&amp;P Defensive Sector Proportion Hits New Low, &#34;Seven Giants&#34; P/E Ratio Raises Alarm</h2>
Bank of America points out that the proportion of defensive sectors (healthcare, utilities, consumer staples) in the S&amp;P 500 index has dropped to 18%, the lowest level since 2000, indicating a very high market risk appetite. More funds are betting on a barbell allocation between the &#34;Seven Giants&#34; and global value stocks to hedge against potential volatility from localized asset bubbles.
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The current trading P/E ratio of &#34;Seven Giants&#34; stocks is 42 times, which, although lower than the historical bubble average of 58 times, still requires caution. Since 1900, the average increase in stock market bubbles has been 244%, while the &#34;Seven Giants&#34; have risen 192% from their March 2023 lows, suggesting there is still a 30% upside potential.
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The real interest rate on U.S. 30-year bonds has risen to 2.9%, the highest level since November 2008. Historical data shows that 12 out of the last 14 asset bubbles were accompanied by rising bond yields.
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Bank of America maintains its &#34;BIG&#34; asset allocation recommendation for 2025: Bonds (end of excessive U.S. government spending), international stocks (relative valuation advantage and fiscal stimulus in the EU/China), gold (the best hedge against a dollar bear market)

Michael Hartnett pointed out in his research report that global stock markets recorded the largest weekly net outflow of funds this year in the past week, amounting to as much as $9.5 billion, while emerging market stocks saw the largest net inflow of $2 billion this year. The US dollar index continues to weaken, and global market funds are clearly flowing into gold, bonds, and cryptocurrencies

- Global stock markets experienced significant outflows this week, with a net withdrawal of $9.5 billion, marking the largest weekly outflow of 2025.  
- In contrast, emerging market stocks saw a record inflow of $2 billion, while gold and bonds attracted $1.8 billion and $19.3 billion, respectively, as the dollar index weakened.  
- Bank of America recommends a "BIG" strategy focusing on bonds, international stocks, and gold, as the market shifts towards these assets amid a bearish dollar outlook.

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Bank of America

Bank of America: Global stock markets experienced the largest weekly net outflow of the year, while emerging market stocks saw the largest net inflow, and the dollar entered a bear market