Deutsche Bank notes surge in tech sector positioning

Deutsche Bank (ETR:DBKGn ) reported a notable increase in equity positioning within the technology sector, reflecting a trend of heightened investment activity in mega-cap growth (MCG) and technology stocks.

According to the bank's analysis, this sector's positioning has sharply risen, diverging from other sectors that have seen more sideways movement.

The bank's measure of aggregate equity positioning remains elevated but not extreme, with a z-score of 0.80, placing it in the 93rd percentile. Discretionary investor positioning has been volatile this week, with a z-score of 0.76, which is above average and in the 89th percentile.

Systematic strategies have also seen an uptick, with a z-score of 0.98, driven by a decrease in volatility across both equities and bonds. Notably, bond volatility is at its lowest point since late 2021.

The shift in the technology sector is believed to be anticipating a modest uptick in earnings growth, which contrasts with the gradual slowdown observed over the past three quarters. This optimism is reflected in the positioning of MCG and Tech stocks, suggesting that investors are factoring in potential earnings improvements.

Equity fund flows continued steadily, with $8.8 billion moving into equities, highlighted by a $13 billion increase in the United States and a $5.6 billion rebound in China. These inflows were partially offset by outflows from other regions.

Bond inflows also rose, totaling $10.5 billion, mainly into investment-grade (IG) and broad-mandate funds, although government and emerging market (EM) bond funds experienced continued outflows.

Additionally, S&P 500 companies announced over $75 billion in buybacks this week, marking one of the largest non-earnings season weeks on record for buyback announcements. Deutsche Bank forecasts that gross buybacks will reach approximately $1.3 trillion next year, increasing in tandem with earnings.

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Source: Investing.com