Investors focus optimism on European stocks
Investors are at their most optimistic about European equities for 18 months, but last month's bullish attitude towards the global economy has softened, according to the latest Bank of America-Merrill Lynch fund manager survey.
Only 1% of respondents were investing less than their benchmark allocation to equities in the eurozone, down from 13% last month, according to the survey. The result is the most optimistic assessment of the region since February last year, and represents a substantial improvement in sentiment since a low in March when a net 40% were underweight.
The figures mean that eurozone equities became the second most popular among fund managers and investors after emerging markets. A net 40% are still overweight in the developing markets, but the proportion is smaller than last month, when a net 52% said the same.
Michael Hartnett, the chief global equity strategist at Bank of America Securities-Merrill Lynch Research, said: "Europe’s comeback in popularity underscores how investors no longer see emerging markets as the only global growth story. Investors now have a broader regional and sector strategy."
A more balanced perspective on regional equities coincided with a mild pullback in expectations for the global economy. A net 72% of respondents said the economy would "strengthen" over the next 12 months, but the same proportion predicted slower growth and inflation.
Average cash levels in portfolios, which are deemed a measure of investors' confidence towards market risk, increased to 4.1% of total assets from 3.7% last month, which was lowest since July 2007.
Gary Baker, head of European equity strategy at Bank of America Securities-Merrill Lynch Research, said: "September's jump in cash levels and lower equity exposure shows that investors’ risk appetite lags their confidence in the recovery. Goldilocks is back in town. The consensus expects a global recovery but expects it to be below trend and not inflationary."
--write to Phil Craig at pcraig@efinancialnews.com
del.icio.us
Digg
Newsvine
reddit
StumbleUpon