The global survey of 214 institutional investors showed that only a net 3% believe that the world economy will weaken in the coming 12 months, down from a net 27% in December 2011.
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The proportion of investors taking lower than normal levels of risk has improved to a net 33%, compared to a net 42% in December 2011, the survey stated.
According to the survey, the proportion of respondents viewing geopolitical risk as above normal has jumped to 69% in January from 48% in December 2011. This has, in the past, been correlated with a spike in the oil price.
"Investors are tip-toeing rather than hurtling toward higher risk exposure; the US market and high quality cyclical sectors, such as energy and tech, have been the main beneficiaries of lower cash holdings," said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research.
According to the findings of the survey report, fears of a global corporate profit slowdown still exist but have receded in the past month. While a net 21% of the panel still expects profits worldwide to deteriorate in 2012, that’s sharply lower than the net 41% taking the view in December last year.
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By GlobalDataAlso, the proportion of the panel expecting corporate earnings growth to be under 10% has fallen to a net 42% from a net 60%.
Further, a net 56% of respondents believe that profit outlook for corporate is more favorable in the US, which is up from a net 50% in December 2011, and a net 70% said that the profit outlook for the eurozone is the least favorable of all regions, compared with a net 72% in December 2011.
Investors are returning to the view that corporate need to invest more. A net 55% of respondents said that corporates are underinvesting, the highest reading in 10 months. A net 37% of the panel believes that corporate are "underleveraged," up from a net 31% in December 2011, the report said.
