Appetite for stocks remains high, says BofA Merril Lynch survey
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Investors appear to be positive on the global economy's recovery and are continuing to increase exposure to equity markets. Optimism on emerging economies, including Russia, Indonesia and India has also improved notably.
According to the fund manager survey by Bank of America-Merrill Lynch (BofA ML), a net 61% expects macroeconomic performance around the world to strengthen over the next year. Further, a net 57% of asset allocators are now overweight equities, up from a net 51% in the two previous months. The report further states that after four months of improved sentiment towards China, the month of March also saw emerging market (EM) investors become less constructive in the region. But optimism on Russia, Indonesia and India improved notably, it said, adding even Brazil showed signs of improvement in March.
March also registered the highest level of dollar bullishness in the survey's history. A net 72% of respondents now expect the US currency to appreciate over the next year, a 30-point increase in a month. Bearishness on US stocks has also reversed. A net 5% identify the US as the regional market it most wishes to overweight, compared with January's net 19% underweight. The US also offers by far the best outlook of any region for corporate profits, investors believe.
This positive stance offsets a gloomier view of China as only a net 14% of regional investors now expect the Chinese economy to be stronger in a year. This represents one of the sharpest falls in this reading in the survey's history.
Significantly, increased fears of a hard landing in China are reflected in a shift out of emerging market equities and into developed markets (mainly the US and Japan), adds the report.
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