Investors' most favored market in February is…
Asset allocators are overweight equities and underweight bonds and cash, with high overweight positions in emerging markets, a survey shows
Investors growth expectations rose to their highest level since February 2011, while profit expectations also surged to the highest level in two years, a survey among fund managers by Bank of America Merrill Lynch showed.
The survey was carried out between 1 and 7 February among 251 panelists with $691 billion assets under management.
Investors are the most bullish on emerging markets equities in 12 months, with a net 43% reporting being overweight and have reduced their allocation to the eurozone from net 15% overweight to net 8% overweight in January.
Even so, eurozone remains the second most favored region, after Emerging Markets, Bank of America Merrill Lynchs analysts noted.
The worlds most popular sector is the pharmaceutical one, followed by technology although tech fell to its lowest overweight positioning in 4 years.
The positioning in banks and consumer discretionary rose to multi-year highs, the survey showed, but weightings in telecoms and utilities fell close to their lowest levels since 2004.
Global investors are most overweight global banks since February 2007, while US investors are most overweight US banks on record, with a net 24% overweight.
Materials and energy are two of the least-loved sectors, while commodities are a modest underweight, the surveys authors said.
CHINA MOST FAVORED
In emerging markets, China is the most favored market, with a net 50% overweight, the highest in a year, with Russia, Thailand and Turkey the only other countries that were consensus overweight in February.
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In emerging markets sectors, only consumer discretionary and technology were consensus overweight, with financials falling from overweight to neutral for the first time in 6 months.
Specifically among investors in Asia Pacific, allocations to India and Indonesia jumped higher this month, with both regions swinging into overweight positions from being previously underweight. But investors sharply reduced allocations to South Korea and Australia, which are now the two least favored regions in Asia Pacific.
Inflation expectations have quietly risen, reaching the highest level since May 2011 this month, but two thirds of the respondents still believe that global economic growth and inflation are likely to be below trend this year.Investors clearly want companies to pursue growth, the surveys authors said, nothing that 48% of respondents said companies should use their cash to increase capital expenditure, with only 12% demanding that they use it to repay debt.
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