That’s the ‘UBS Flow Sentiment’ indicator, which pulls together six factors (including sector positioning and hedge fund exposure) to show how clients of the Swiss bank feel about the European equity market.
As you can see, sentiment among UBS customers remains positive in spite of the market’s recent strong run. But not universally so according to the bank’s latest European Flow Watch Report:
Hedge fund net buying is running at the highest level since October 2007 but, in aggregate (long only and hedge funds) investors have just turned modest sellers as long only selling has outweighed this.
But everyone still loves cyclical stocks:
Cyclicals: biggest net buying for nearly a year (now over 2 standard deviations above average). Particularly extended in metals & mining and capital goods.
In particular the hedgies:
Hedge funds sector positioning: appear to be overweight (and increasing weightings) in industrials. They have reduced the underweight in banks over the last three months.
And sentiment towards the banks is improving:
Banks: switch from heavy net selling over the last three months to modest net buying over the last month.
Meanwhile retail investors are buying Swedish, Swiss and UK equities:
Sweden, Switzerland, and the UK: biggest retail net inflows to equities over the last three months and also among the best performing markets in Europe. The Swedish market has been driven by the investor flows into cap goods.
All of which, is a pretty good summary of what has been happening in this slow grind higher.
Related links:
Priced for utopia (tin hats for spring?) – FT Alphaville
Vacillating Bulls and Dogmatic Bears - The Reformed Broker