Global investors most optimistic in 12 months
Investors are the least pessimistic they have been for a year, according to the latest Bank of America fund manager survey.
The latest survey, which questioned 299 fund managers with $847 billion in assets under management, found all key measures of sentiment had improved in February. This included growth expectations, equity allocations and cash allocations.
Global growth expectations were the least pessimistic in a year with only a net 35% expecting a weaker economy, a 15 percentage point improvement on January’s figures of 50%.
Recessions fears had greatly reduced with less than a quarter now expecting a recession in the next 12 months, down from a peak of more than three-quarters (77%) just three months ago. The number who felt a deep global recession was a “tail risk” had also declined from 20% to 16%, moving it into third place behind high inflation and geopolitical risk.
Bank of America noted that “prior peaks in recession fears coincided with the start of major bull markets in asset prices”.
This matched market commentary with Australian Treasurer, Jim Chalmers, stating this week that he was confident Australia could avoid a recession based on Government and central bank forecasts. Meanwhile gross domestic product (GDP) data in the UK showed it had “narrowly avoided” a recession this month.
Cash allocations continued to fall, down from 5.3% to 5.2% this month, indicating managers were putting cash to work. This was the same level as it stood at last year prior to the start of the Russia/Ukraine invasion.
Bank of America investment strategist, Michael Hartnett, also noted there was “euphoria” surrounding emerging market equities after allocations surged by 16 percentage points to a net 46% overweight.
EM equity allocations were now at the highest since March 2021 and it was cited as an area where investors were bullish.
“February saw big jump in allocation to EM stocks…the three-month rise in allocation (Feb vs Nov) a whopping 51 percentage points, the most on record.”
This increased allocation to emerging markets came at the expense of a rotation out of defensives, utilities, healthcare and consumer staples.
AUTHOR
Laura Dew
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