Global investors have become significantly more confident in the outlook for growth, reaching the highest level in nearly four years, a BofA Merrill Lynch survey of fund managers showed.
A net 72% of respondents now expect the world’s economy to pick up over the next 12 months -a striking rise from July’s net 52%.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The report also reflected a brighter outlook for corporate profits, with the portion of respondents indicating they expect improved per-share earnings in the next year reaching 43%, the highest level since early 2011. However, slightly less than a third expect double-digit earnings growth during the period.
According to the report, investors remain concerned over a "hard landing" in China, though this has calmed since last month. More than half of the respondents said they still identify this threat as the biggest risk for markets and economies. However, a net 32% of investors expect China economic growth to be weaker, improvement from net 65% expecting the same last month.
At the same time, investors’ sentiment towards the eurozone has improved notably. A whopping 88% of European fund managers now anticipate the region strengthening in the year ahead, twice the level recorded last month.
European equity holdings rose to the highest level in five years as optimism that the region’s economy is recovering surged. A net 17% of European money managers, who together oversee US$516 billion, are now overweight euro-area equities, meaning they hold more of the region’s shares than are represented in global benchmarks, according to the survey.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataHowever, the survey indicates that investors remain stubbornly bearish on emerging markets (EM) equities. The survey indicates fund managers’ exposure to EMs is the lowest in 12 years.
Emerging market as a class now is the least preferred asset class in terms of equities. In fact 12 year low is the weight on EM and that is going right back to 2001, the report revealed.
Nonetheless, some positive EM stories stand out from the survey. In particular, Korea has seen a notable turnaround in sentiment since last month. EM specialists now rank the market one of their top picks (alongside China and Russia), from a net 21% underweight in July.
An overall total of 229 panelists with US$671 billion of assets under management participated in the survey. A total of 180 managers, managing US$516 billion, participated in the global survey. A total of 112 managers, managing US$290 billion, participated in the regional surveys.
