According to the survey, BofA Merrill Lynch’s growth expectations composite has fallen to 37 in July 2012 from 43 in June 2012 and 54 in May 2012. Also that the deteriorating outlook for profits is driving the fall in confidence.
Further, a net 38% of investors responded that corporate profits will worsen in the coming 12 months, compared with a net 19% a month ago. The figure represents a 39% point drop since May 2012.
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The confidence in corporate growing profits by 10% was also at its lowest point since April 2009 and a net 69% of the panel expects corporate profit growth to be less than 10% in the coming year, while a net 58% said that operating margins will decrease, up from a net 41% in June 2012.
After two months of deterioration, the broader macro-economic outlook and risk appetite also seemed to have stabilized with a net 13% of the panel saying that the world economy will weaken in the coming year, which is a drop of 2% points after a fall of 26 points from May 2012 to June 2012.
Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research remarked "July’s survey highlights that corporate profit expectations have to catch up with the downgrade in the economic outlook we have seen the past two months."
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