1. I think the total world stock market is about $36.6 T. From the chart, I calculated the net flows and percent of the total world market.
Year...Retail....Inst....Net.....Percent of World Stock Market
So the net outflow is a tiny percentage of the total stock market.
2. Even of the the net outflow were zero, stock prices could rise or fall. Demand is how much quantity buyers are willing to buy at a given price. If everyone woke up one day and decided that they were willing to pay twice as much for earnings, i.e. P/E=30 instead of P/E=15, prices would double.
3. People are paying $X for $1 of earnings. Suppose X is $20 for a $1 of earnings. If earnings grows 5%, the price can increase 5% without any change in the demand.
One would think that a negative net outflow would reduce the demand for stocks. All other things being equal, it probably would. But the tiny outflow percentage wise is likely swamped by all the other factors.
But I would still be interested in finding out if there are other investor classes that are not included in retail and institutional. What about sovereign funds? Does that count as institutional? What about the PPT? Where is that accounted for?
Gott mit uns.