Capital Outflows Top $50B As Economic Uncertainty Hits Six Largest Investment Firms

Some of the affected firms include Berkshire Hathaway, BlackRock and IHC, among others. However, Blackstone Group, Prologis, others generated significant capital inflows.

This article was written by Solomon Oladipupo and originally published by Finance Magnates.

Six of the world’s largest investment companies have seen huge capital outflows year-to-date (YTD) from their market capitalization as economic uncertainty troubles the industry. As of March 16, 2023, the leading investment firms accounted for a capital outflow of $52.55 billion YTD, according to new data from financial publication FinBold.

Of the six, four are based in the United States and together account for near 80% of the capital outflows, FinBold said in its report, noting that “the plunge in market cap is a direct impact of investors’ rising level of uncertainty due to persistently high global inflation, change in monetary policies, and interest rate hikes by various central banks.”

Largest Investment Firms Lose Big

Out of the six companies, Nebraska-based Berkshire Hathaway saw the biggest outflow as $29.12 billion left the American investment giant. This represents 4.27% of the firm’s current market capitalization of $652.66 billion.

New York-based global investment firm BlackRock trailed behind Berkshire Hathaway as $11.52 billion left the company year-to-date. This stands for 10.82% of the company’s current $94.91 billion market cap.

Coming in with the third largest loss is International Holding Company (IHC), an Abu Dhabi-based investment company, which has recorded $8.97 billion in capital outflow since the start of the year. The market cap of the company, which is one of the Middle East and Africa’s large conglomerates, stands at about $236 billion.

Furthermore, Prosus, one of the largest technology investors in the world, posted an outflow of $1.64 billion YTD, coming in fourth. The Amsterdam-based firm currently boasts of a market cap of about $139 billion.

In the fifth position is Crown Castle, a Houston-based operator of telecommunications networks, which recorded an outflow of $1.23 billion, bringing its market cap to $57.51 billion. On the other hand, US banking giant Morgan Stanley, which ranked 6th, posted the least losses with a capital outflow of $0.07 billion.

Although economic uncertainty contributed majorly to the plunges, the capital outflows for the US investment firms come at a time the banking industry in the country is grappling with some of its largest bank failures since the 2008 financial crisis. Four US lenders collapsed within the span of four days last week.

Technology-focused Silicon Valley Bank collapsed last Friday, plummeting bank stock prices which later rebounded. Signature Bank was shuttered later on Sunday. However, days earlier, crypto-friendly Silvergate Bank voluntarily liquidated its assets.

Blackstone, Prologis, Others Generate Capital Inflows

Despite the huge volume of capital outflows, some investment firms also generated a significant amount of inflows. This group was led by Blackstone Group, a New York-based alternative asset manager, whose market cap shot up to $62.57 billion after attracting $9 billion.

Blackstone Group was trailed behind by Prologis, a California-based real estate investment trust which generated an inflow of $6.76 billion during the period. Digital infrastructure provider Equinix comes next with an inflow of $3.86 billion.

In addition, Swedish investment firm Investor AB generated an inflow of $1.46 billion with a market cap of $58.13 billion during the first months of 2023 up until March 16th.

“Looking ahead, the prevailing level of uncertainty could push investors targeting investment firms to stay on the sidelines until market conditions improve,” FinBold explained.