High-flying technology stocks, the darlings during the pandemic, were the most rejected in the first weeks of 2022, as investors believe that the main risk to markets is a wave of rate hikes by central banks, according to two polls on Tuesday.
A January 7-13 BofA survey of investors with combined assets under management of more than $1.2 trillion showed fund managers trimmed their overweight positions to their lowest levels since December 2008.
Meanwhile, a monthly Deutsche Bank survey showed an overwhelming majority of respondents believe US tech stocks are in bubble territory as investors remain bearish on more aggressive policy moves and higher yields.
“Higher-than-expected inflation remained the predominant driver of these bearish fears, but its counterpart, a more aggressive Fed, drew far more concern from respondents this month,” Deutsche Bank strategists said in a monthly note.
In response to likely central bank rate hikes this year, investors have increased their positions in equities, notably in Europe, cyclical banks, commodities and industrials, sectors expected to benefit from the hikes. of types.
The change in position has been extreme compared to historical averages. Investors have increased bullish bets on banks, commodities and materials, and cut positions on technology, emerging markets and bonds.
Investors have become more bullish on European stocks from a global reopening trading perspective and want to increase their exposure in the next 12 months as well, according to the BoFA survey.
The three most popular trades were long tech stocks, short US Treasuries and short Chinese stocks, according to the US investment bank.
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