AXA IM's Thomas: Bank stress tests prompted mid-cap sell-off

Mid Caps

Nigel Thomas, manager of the £4.6bn AXA Framlington UK Select Opportunities fund, has said this year's mid-cap sell-off was down to US investment banks pulling credit lines.

The FTSE 250 ex-ITs index fell by 9% between early March and mid-May, and has remained subdued since that point, down 7% from the March peak as of 24 September. Momentum names were hardest hit in those falls, despite no obvious stock-specific catalysts, and Thomas said bank stress tests crried out in March by the US Federal Reserve may have had an impact. "It was triggered by Citigroup failing financial stress tests in the US. The Fed and the SEC asked some of the investment banks to reduce some of their high-risk credit lines. "They put their margins up to the hedge funds, and we ...