Nowcasting investment flows: upwards revision of our projection for 2nd quarter 2017

Nowcasting investment flows: upwards revision of our projection for 2Q 2017

July 25, 2017

Emanuele De MeoLorenzo ProsperiGiacomo Tizzanini

We have revised upwards our Nowcast of investment flows for the second quarter 2017 to 22 billions euro

 

Based on new incoming data, we have revised upwards the Nowcast of investment flows in mutual funds for the second quarter 2017 (Fig.1) in line with an upward revision of first quarter’s historical data (+5.3 billions). According to our Nowcasting model , we expect investment flows to exceed 20 billions euro, increasing by 9.7% from the previous quarter. Our projections confirm an extremely positive view for the industry in the first half of 2017, with volumes increasing by 86.5% compared to the second half of 2016. The positive momentum is projected to continue also in the third quarter 2017, with investment flows to stay at large levels (15 billions average quarterly flows) that characterized the industry in the last 5 years.

Fig. 1: Nowcasting investment flows in mutual funds (in billion EUR)
Fig. 1: Nowcasting investment flows in mutual funds (in billion EUR)
Source: Processing conducted by Prometeia on data provided by Assogestioni. Historical data at July 2017.
 

The positive dynamic in the mutual funds’ sector is mainly explained by the bullish momentum in stock markets that characterized the first half of 2017, especially in US and Italy. The significance of American and Italian stock markets in driving the Nowcast of mutual funds has increased from 22% at the end of 2016 to 24%(May 2017) (Fig.2). The positive contribution of these drivers has been only partially counterbalanced by the negative effect deriving from the increase of Italian government bond yields. Indeed the yield on BTPs has increased in the first half of 2017, but the likelihood of this factor to drive mutual funds’ dynamic has declined by 2 percent from the end of 2016.

 
Fig. 2: Likelihood that the variable is a driver behind the net inflows into mutual funds (full-sample)
Fig. 2: Likelihood that the variable is a driver behind the net inflows into mutual funds (full-sample)
Figure 2: Likelihood that the variable is a driver behind the net inflows into mutual funds (full-sample)
 
 
[1] Reference should be made to Wealth Insights, April 2017 
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