Confidence in a recovering global economy is extending into 2013 as investor fears surrounding the fiscal cliff eased, according to the BofA Merrill Lynch Fund Manager Survey for December.
A net 40 percent of investors believe the global economy will strengthen in the year ahead, a rise of six percentage points month-on-month and double the reading two months ago. The number of investors viewing the U.S. fiscal cliff as the biggest tail risk has fallen to 47 percent, down from 54 percent in November. Despite this fall, however, the fiscal cliff remains the number one worry.
Emerging markets are the preferred region for the panel. Optimism about China’s economy has reached the highest level recorded by this survey. A net 67 percent of the regional survey respondents say China’s economy will strengthen in the coming year, up from a net 51 percent in November. A net 38 percent of asset allocators are overweight emerging market equities, double the level of September’s survey.
“The bulls are back in China, while policy makers elsewhere put bears onto the back foot. If the bulls are to claim a decisive victory, we need hard evidence that the economy is reaccelerating,” Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research said. “Growth expectations and positioning are converging to mid-range levels, but many still think earnings expectations are too high. When these concerns subside, it’s likely that cheap valuations of European stocks will attract global fund managers,” said John Bilton, European investment strategist.The number of asset allocators overweight U.S. equities has fallen since November. But allocations to the eurozone are outweighing U.S. allocations for the first time since November 2010. The net percentage of asset allocators overweight eurozone equities has risen to seven, up from a net 1 percent in November. In terms of sector, investors have maintained a broadly “risk on” stance – allocations to cyclical sectors Consumer Discretionary and Industrials have increased, and the market is firmly overweight both. But the number one sector remains Pharmaceuticals.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV