Buy gold, crypto and China, tread carefully on rich U.S. tech: BofA’s Hartnett

Investing.com -- Global equities took in $19.6 billion and bonds added $19.2 billion in the week through July 30, continuing one of the strongest flow years on record, according to Bank of America (BofA).

About $1.9 billion went into crypto funds, while $11.9 billion was pulled from cash.

Cumulative 2025 inflows into global stocks are now annualizing $640 billion, the third-highest ever.

U.S. equities alone brought in $59 billion in the first half, with no signs of foreign interest slowing, BofA noted.

Regionally, flows into European equities hit a seventh straight week at $1.9 billion.

Emerging markets added $800 million, while Japan saw $700 million in outflows.

U.S. large cap funds absorbed $14 billion during the week, while value, growth, and small caps saw outflows of $1.4 billion, $1.7 billion and $4.5 billion respectively.

Materials led sector inflows with $2 billion, while health care and real estate each lost $400 million.

Despite the persistent inflows into U.S. assets, BofA strategists led by Michael Hartnett flagged caution.

They note that “short-term U.S. big tech momentum is now stretched,” fueled by optimism around exponential AI capex spend. “Trading bulls need new highs MAGS >$60, SOX >$6k, ARKQ >$100 to stay long,” the note added.

BofA instead maintains a preference for international and contrarian positions. “We stay long international as global investors will barbell U.S. growth with rest of world (RoW) value stocks.”

Meanwhile, with the market still broadly underowned, Hartnett expects continued outperformance from Chinese small caps, citing signs of bottoming in credit, consumer and real estate trends.

“No reason why H-shares can’t challenge 10k,” Hartnett wrote, pointing to strength in Chinese exports to the rest of the world and potential tariff relief under Trump.

Hartnett also reaffirmed a structural long view on gold and crypto against the current macro backdrop driven by tariffs and sanctions.

In fixed income, investment-grade bonds saw $10.2 billion in inflows in the past week, extending their streak to 14 weeks.

High-yield bonds and EM debt added $1.5 billion each. U.S. Treasuries brought in $3.1 billion.

Meanwhile, muni bond funds posted an eighth straight week of inflows, and TIPS took in $500 million.