Bearish investors in emerging markets 'virtually extinct'
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Emerging Markets

Bearish investors in emerging markets 'virtually extinct'

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A survey by Societe Generale showed very few bearish investors for a short-term horizon in emerging markets, while bulls advanced

Investors in emerging markets are bullish again, a survey of 85 clients in Asia, Europe and the US by Societe Generale’s cross asset research team showed.

The survey showed that over the short-term (2 weeks) 77.6% of clients were bullish towards emerging markets in November, while “the population of bearish EM investors is now virtually extinct,” the bank’s research team said in a statement.

The number is up from 60.7% of investors who said they were bullish on emerging markets over a short term in October. Only 3.5% of investors were bearish in November compared with October’s 26.2%, while 18.8% were neutral, higher than the 13.1% in October.

On a longer, 3-month horizon, investors were even more positive, with 89.4% being bullish compared with October’s 77.4%; 7.1% were bearish and 3.5% neutral.

The sample of investors comprised 42 so called “real money” investors – such as pension funds – and 43 hedge funds.

Among real money investors, 92.9% gave a bullish answer for the next 3 months, while the percentage was 86% for hedge funds.

Investors “have rebuilt their risk positions markedly” compared with October, increasing their risk-taking, the survey showed.


“There is a noticeable difference between hedge fund investors and real money investors in terms of the positioning index, with hedge fund positioning now more aggressive on the bullish side than for real-money investors,” according to Societe Generale. When comparing sentiment with views, the bank’s analysts said, there were more investors than a month earlier who felt they were under-invested; 48.2% of the total of investors surveyed felt they were under-invested in emerging markets, while 20% felt they were over-invested.

“I guess EM investors are keen to brush away the short-term risks then, including the fiscal cliff. Interestingly, the positioning picture looks stronger and stronger,” Benoit Anne, head of market strategy at Societe Generale, said.

“Indeed, a huge amount of real-money investors feel that they are bullish but still under-invested. If this is true, the first quarter of 2013 is bound to be spectacular.”

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