Investors 'extremely bullish' on emerging markets

The percentage of investors that have a bullish near-term (over the next two weeks) view on emerging markets jumped to 84.4% this month from only 41.8% last month in the survey carried out on 90 of the bank’s clients in Asia, Europe and the US.

Societe Generale, whose sample comprised 45 real-money investors – institutional investors such as pension funds or insurance companies - and 45 hedge funds, notes that investors are less bullish over the medium term relative to the near term, with 72.2% of clients bullish when looking at a three-month horizon.

“There has also been a marked increase in the number of investors who believed that the outlook for global emerging markets would actually worsen from two weeks to three months,” Societe Generale said.

Around 53% of investors foresaw a deterioration of the outlook over three months relative to two weeks, with only 28% of the total predicting the opposite.

“This of course reflects some uncertainty about the sustainability of the bullish market backdrop, with some investors being bullish short-term but switching to neutral or bearish over three months,” the bank said.

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“At the same time, the group of bearish investors is getting smaller, with only 15.6% of total investors being bearish on global emerging markets over a three-month horizon – as opposed to 23% last month,” it added.

The technical picture has improved, with 37.8% of total investors feeling that they are under-invested against 31.1% that are over-invested.

“This is potentially positive as it points to the need for higher risk-taking,” Societe Generale said.

Among hedge funds, 51.1% are perceived to be under-invested versus 36.7% over-invested, the survey showed.