Investors withdraw $83bn amid Europe’s crisis

A looming recession that could last longer than any experienced by Americans, war, and a winter of energy restrictions. A suddenly hawkish ECB too. Nobody knows how Europe will get out from under its pile of problems, and investors aren’t waiting around to find out.

According to figures cited by Deutsche Bank AG from EPFR Global, money managers withdrew $3.4 billion from European stock funds in the week ending September 7, bringing the six-month total of withdrawals to $83 billion. BlackRock Inc. and Amundi SA, the largest asset management firms in the region, are among the companies that have left. Analysts at Bank of America Corp. and JPMorgan Chase & Co. have lowered their year-end predictions for the Stoxx 600 and Euro Stoxx 50, respectively.

Europe’s problems have gotten worse recently as the continent faces the possibility of a recession and its central bank launches an aggressive battle to control inflation. Gas rationing may be necessary this winter as a result of Russia’s reduction in gas exports to the West.

It’s already causing financially constrained governments—some of which have a debt to GDP ratios of about 150%—to go deeper into their budgets in order to find hundreds of billions of dollars to pay for suggested price ceilings. The common currency continues to plunge to levels against the dollar that have not been seen in twenty years.

“We’ve expected a recession in Europe for months given the energy crunch, but we don’t think equities have fully priced this in,” said Wei Li, BlackRock’s London-based global chief investment strategist.

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