A survey of 100 investors, 50 of them hedge funds and 50 real-money investors such as pension funds, showed 40% of them bearish on emerging markets over a two-week horizon, with only 33% of investors bullish.
The survey, carried out monthly by Societe Generale among clients in Asia, Europe and the US, was already showing bears taking the upper hand in February.
The poll in March showed that "even the medium-term bullish signal is weakening considerably," Benoit Anne, a strategist with Societe Generale, said.
Over a three-month horizon, 49% of investors are bullish on emerging markets, "which is quite low by historical standards," he added.
The short-term sentiment indicator pointed to a slight strengthening of the bearish bias from a month earlier while sentiment over three months was significantly less bullish than in February.
In terms of positioning, "at this point, emerging markets investors are running very little risk," said Anne.
Overall, 52% of total investors run positive risk – outright long for hedge funds or overweight for real-money investors – down from 57% in the previous survey. The number of investors who are "underweight" emerging markets rose to 22% from 17.9% in February. But the technical picture is negative, as there are more investors who feel that they are over-invested, which means their risk position should be reduced if they were to be aligned with their sentiment.
Among hedge funds, 50% are perceived to be over-invested against 20% under-invested.
The positioning picture looks better for real-money investors, with more investors that are under-invested, at 42%, than those who are over-invested, at 22%.
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