OREANDA-NEWS. Global investors’ confidence in the world’s economic outlook has fallen significantly due to concerns over China and emerging markets, according to the BofA Merrill Lynch Fund Manager Survey for September. Asset allocators have adopted a “risk-off” stance in response.
  • Threat of recession in China increases as biggest tail risk; concern over a potential emerging markets debt crisis also rises sharply.
  • Investors’ risk appetite evaporates: equity overweights are down a net 24 percentage points in a month, while commodity shorts are extended.
  • Sentiment towards Global Emerging Markets sours further, with underweights at a record net 34 percent and aggressive UWs are at an all-time high.
  • Cash balances are back up to 2008 crisis level of 5.5 percent.
  • Hedge fund net exposure and perception of market liquidity conditions are both at the lowest level in three years.
  • Investors’ expectation of U.S. Fed rate rise has been postponed to Q4.

“Investors were already positioned for lower growth in China and emerging markets, but their risk-off stance has intensified. Contrarians will be noting the aggressive underweight positioning in emerging markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.

“European equities have been hurt by the risk-off trade, but they remain a favored market,” said James Barty, head of European equity strategy.

Fund Manager Survey
An overall total of 214 panelists with US$593 billion of assets under management participated in the survey from 4 September to 10 September 2015. A total of 178 managers, managing US$480 billion, participated in the global survey. A total of 96 managers, managing US$204 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Global Research with the help of market research company TNS. Through its international network in more than 50 countries, TNS provides market information services in over 80 countries to national and multi-national organizations. It is ranked as the fourth-largest market information group in the world.

BofA Merrill Lynch Global Research
The BofA Merrill Lynch Global Research franchise covers almost 3,400 stocks and 1,200 credits globally and ranks in the top tier in many external surveys. Most recently, the group was named Top Global Research Firm of 2014 by Institutional Investor magazine; No. 1 in the 2015 Institutional Investor Latin America survey; No. 1 in the Institutional Investor 2015 Emerging EMEA Survey; No. 2 in the 2015 Institutional Investor All-Asia survey; and No. 2 in the 2015 All-America Fixed Income survey for the fourth consecutive year. The group was also named No. 2 in the 2014 Institutional Investor All-America survey and No. 2 in the 2014 All-China survey.

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