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Investors stuck a modest $5 billion into equities over the past week, with U.S. funds leading inflows, Bank of America Merrill Lynch (BAML) said on Friday, adding that world stock markets had gone from being a “raging bull to a sitting bull”.

Rising trade protectionism, fiscal stimulus and policies that redistribute wealth are now being enacted in the United States, European Union and across Asia as governments try to boost their economies, the bank noted, dubbing the moves as “populist easing” or PE.

But that will prove far less bullish for asset prices than the decade of quantitative easing (QE), when central banks pumped liquidity into world markets. The Federal Reserve and other central banks are now turning off the taps.

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“PE is much less asset price-friendly than QE,” BAML analysts wrote.

World stocks have fallen 5 per cent from January’s record highs. Outside the United States, equities have struggled due to worries about a trade war and fears that economic growth -- and profit margins -- may have peaked.

BAML described the third-quarter rally in stocks as “largely a USA-only affair”, as economic data suggested a deceleration in global profits elsewhere. U.S. funds took in a net $4.6 billion while emerging and European funds lost a net $600 million each.

European funds saw outflows for the 22nd straight week.

Overall, passive ETF investors poured $10.7 billion into equity funds while mutual funds pulled out $5.7 billion, the data showed.

Investors also added $5 billion to bonds last week, including $1 billion into financials and another $3 billion into corporate bonds, BAML said. Emerging bond funds shed $500 million.

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