In Q2 2014, U.S. institutions decreased equity holdings

Institutional investors in the ten largest money management countries (as denoted by the equity assets of the country’s fifty largest institutional investors) decreased equity holdings by 0.3% quarter-over- quarter. While eight of the ten country aggregates showed an increase in equity assets in Q2, sales in the U.S. aggregate were larger than the combined increase in exposure of those groups.

The U.S. aggregate shed $100 billion in equity assets in Q2, which only amounted to a 0.9% decline due to the immense size of the top 50 U.S. institutional investors. The group’s home country focus meant that most of the sales were in domestic equities. The Japanese and French country aggregates were also net sellers of U.S. equities in Q2, but most of the other country aggregates disagreed. Six of the ten aggregates increased exposure to U.S. stocks.

On the other end of the spectrum, the U.S. aggregate’s bullishness in Japanese equities was echoed by several other country aggregates, namely Sweden, France, the U.K. and Japan itself. This is the second consecutive quarter that Japanese stocks received the largest equity inflows from the ten largest country aggregates. Toyota Motor Corp. and Japan Tobacco were the favorite Japanese equities in Q2, while Hitachi was the favored purchase in Q1.

Another interesting development was renewed interest in Chinese equities. The Chinese country aggregate bought $5 billion in net equity value in Q2. This contrasts with the first quarter, when the aggregate sold over $90 billion of exposure in domestic equities. Despite the uptick, the Chinese aggregate continued selling shares in most of the same banks it sold in Q1. Out of the five most heavily sold banks in Q1, the Chinese aggregate only added exposure to one during the second quarter: China Minsheng Banking Corp.

On the security-level, the ten largest country aggregates most reduced exposure in Morgan Stanley. The value of sales out of the global financial services company amounted to nearly three times that of the next equity: EOG Resources. In addition, despite positive performance relative to the S&P 500 index, Walt Disney was among the stocks with the largest declines in exposure for the second consecutive quarter. On the other end of the spectrum, the country aggregates took the largest increases in Google (class C) and Daimler. Overall, the largest purchases and sales of the ten country aggregates didn’t drive most trends at the sector level. Widespread purchases and sales led to the largest net increases in exposure in the Materials and Utilities sectors and the largest decreases in the Health Care and Consumer Discretionary sectors.