Fund managers cut the allocation to US equities sharply in January, with 39% reporting an underweight position, the most since October 2005, a survey of investors showed on Tuesday. BofA on the views of global investors.
Optimism about global growth hit its highest level in a year while inflation expectations have peaked, according to the global survey of fund managers, who together manage $772 billion worth of assets.
The survey showed investors turned bullish on eurozone equities, moving from a 10% net underweight in December to a 4% net overweight in January.
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Fund managers also shifted to emerging market stocks, increasing their net overweight to 26%, the highest since June 2021.
European stocks have outperformed their US counterparts since the start of the fourth quarter of 2022, as the region’s growth prospects improve on hopes that the reopening of the Chinese economy will provide a boost and as natural gas prices plummet because milder weather helped replenish stocks.
The data also pointed to a slowdown in inflation in the euro zone and the United States, which is expected to allow central banks to further slow the pace of monetary policy tightening this year.
The pan-European STOXX 600 index is up nearly 20% from its October low and around 8% below its all-time high reached in the first quarter of 2022.
For its part, the S&P 500, the US benchmark index, is up about 13% from its October low and remains almost 17% below its all-time high.
The survey also showed expectations of yen appreciation at its highest level since January 2007, the month before the Bank of Japan last raised the base interest rate. The BoJ meets on Wednesday and expectations have risen that the central bank will change its yield curve control policy.
Recession fears have faded as hopes China’s lifting of some of the world’s toughest measures to contain COVID-19 will provide a boost to global growth this year, with growth expectations in China hitting an all-time high. 17 years old, according to fund managers.
Source: Reuters
Source: Gestion
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