london<u+2014>some foreign investors are ignoring polls predicting a hillary clinton election win and staying out of u.s. equities, even as they believe that this result would be better for markets. that caution has been shaped by the referendum on brexit , when polls and bookies predicted the british would vote to stay in the european union and markets tanked when they chose to leave. some foreign fund managers say they believe that a donald trump victory will hurt markets, given what they say is a lack of clarity in the republican nominee<u+2019>s policies and his anti-trade rhetoric . on monday, predictwise, a new york-based microsoft research project that compiles u.s. poll and betting-market data, gave mrs. clinton an 87% chance of becoming u.s. president. news friday that the federal bureau of investigation is taking a new look at mrs. clinton<u+2019>s emails hasn<u+2019>t yet had a big effect on what the bookies say, though it<u+2019>s unclear what a new round of polls will show. but even as polls and bookies currently anticipate a win for mrs. clinton, some investors remain cautious. foreign-based funds pulled a net $577 million out of u.s. equities in the week ending wednesday while u.s.-based funds added $607 million, according to data provider epfr global. foreign fund managers have taken money out of u.s. stocks in seven of the past eight weeks, according to the data. u.s. funds have also pulled some money out of stocks in the same time frame, but the data is more mixed. to be sure, there are other reasons that foreign funds may be staying shy of the u.s., not least historically high stock valuations and uncertainty over economic growth and the speed of u.s. interest-rate increases. <u+201c>foreign investors are framing the u.s. election differently than their u.s. peers,<u+201d> said kristina hooper, u.s. investment strategist at germany<u+2019>s allianz global investors. <u+201c>if brexit taught us anything, it is that we can<u+2019>t rely on polls, especially when those who are being polled think their views are unpopular,<u+201d> she said, referring to the u.k.<u+2019>s referendum on eu membership. in the immediate aftermath of that june 23 vote, the s&p 500 lost 3.6% and the stoxx europe 600 shed 7%. the british pound fell to a three-decade low against the dollar, where it has mainly traded since. in south america, investors have another recent polling misfire to think about. earlier in october, voters in colombia rejected a peace deal with the farc, or revolutionary armed forces of colombia, despite opinion polls suggesting a comfortable <u+201c>yes<u+201d> victory. colombian markets and the peso sold off in the aftermath of the vote. colin graham, head of active asset allocation at bnp paribas investment partners , said he would reassess his underweight position in equities once the election is out of the way and there is clarity on the federal reserve<u+2019>s interest-rate decision in december. <u+201c>for us as international investors, it<u+2019>s a case of why do it now when you<u+2019>re going to know in two weeks one way or the other,<u+201d> he said. likewise, some asian investors say there is little incentive to put money into the u.s. ahead of the election. <u+201c>there is plenty of time to get involved postelection,<u+201d><u+200b>said<u+200b>michael wegener, who wagers on u.s. deal-making at hong kong event-driven hedge fund case equity partners. should mrs. clinton win the election, u.s. equity markets could rally sharply as these investors jump in to buy again, market participants say. postelection rallies are commonplace. the u.k. stock market and the pound staged a relief rally after a conservative party victory in the 2015 general election. u.s. stocks rallied after george w. bush beat democratic nominee john kerry to be re-elected president in 2004. in the 2012 u.s. election, stocks initially fell when president barack obama beat mitt romney, though they rallied later that month. mrs. clinton has made anti-trade noises of her own. but some foreign investors say they favor the democratic nominee because they believe that she will likely broadly stick with her predecessor<u+2019>s direction, while they are less certain of what mr. trump would do. <u+201c>if clinton wins, which the market sees as a continuation of policy, you could see flows from outside investors who are now holding back from u.s. equities,<u+201d> said andrew sheets, head of cross-asset strategy at morgan stanley. <u+2014>mia lamar contributed to this article. write to georgi kantchev at georgi.kantchev@wsj.com and christopher whittall at christopher.whittall@wsj.com
scarred by brexit, some foreign funds avoid u.s. stocks ahead of election - wsj
georgi kantchev christopher whittall