The survey, conducted by Societe Generale before Christmas among 52 customers in Asia, Europe and the US, showed that about 90% of them were bullish on emerging markets on a 3-month view, which the bank says represents an "all time high."
The monthly survey was launched in February last year. In December, the sample comprised 30 real-money investors (such as pension funds) and 22 hedge funds.
Uncertainty regarding the fiscal cliff led to a less bullish stance for the short term (over 2 weeks), with some 15% of investors saying they were bearish over the near term, compared with November's survey, when bearish investors were "virtually extinct."
In the first day of the New Year, US lawmakers reached a compromise to avoid steep tax increases in what many analysts said was a strong "risk-on" signal.
"Investors produced the strongest 3-month bullish conviction level ever" in the survey, with 90.4% being bullish for the period, compared with November's 89.4%, Societe Generale's researchers said.
In terms of positioning, there were still more investors who felt they were under-invested – meaning that their risk position should be raised if they were to be aligned with their sentiment – compared with November.
"Specifically, there are 38.5% of total investors that feel that they are under-invested, against 28.8% that are over-invested," according to the survey. "This is potentially positive as it points to the need for higher bullish risk-taking, although the picture is not as favourable as in November, when 48.2% of investors felt they were under-invested," Societe Generale's researchers added.
There is a misalignment of positioning with sentiment among real-money investors, with 50% perceived to be under-invested, versus 6.7% over-invested.
But for hedge funds the positioning picture remains negative, with many more investors over-invested. This, however, may have been distorted by year-end operations, the researchers said.