| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 Asia Economy


How to use our RSS feed

Follow Finfacts on Twitter

Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.


Finfacts is Ireland's leading business information site and you are in its business news section.


Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News


Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News




Content Management by interactivetools.com.

News : Global Economy Last Updated: Nov 19, 2014 - 8:36 AM

Global investors have a restored appetite for risk
By Finfacts Team
Nov 19, 2014 - 12:34 AM

Email this article
 Printer friendly page

Global investors have a restored appetite for risk amid greater optimism over the outlook for profits and the economy, according to the BofA Merrill Lynch Fund Manager Survey for November.

A net 47% of the global panel expects the economy to strengthen in the year ahead, a rise from a net 33% in October. Investors have expressed similar positivity over profits – a net 42% say that global corporate profits will improve in the coming year, up from a net 27% last month.

Investors have signaled that their optimism has been translating into action over recent weeks. In October, a net 16% of the panel said they were taking lower than normal levels of risk. This month, a net 2% are taking above-normal risk. The proportion taking out protection against a sharp fall in equities in the coming three months has fallen to a net -39% from a net -35%.

Asset allocators have shifted out of cash and increased their allocations to equities. A net 13% of respondents to the global survey are overweight cash in November, down from a net 27% in October. The proportion of asset allocators overweight equities has risen by 12%age points to a net 46%. Hedge funds have also increased their net allocations to equities – 43% of surveyed hedge fundsare net long equities, up from 35% one month ago. Japan is the region most in favor, while investors are sending mixed signals about appetite towards Europe. Real Estate allocations have reached the highest overweight recorded since its inclusion in the survey in 2006.

“Deflation might be in the back of investors’ minds, but taking on risk, especially in equities, in Japan and in the dollar is at the forefront of their thinking,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Research.

“European stocks were recently boosted by the best earnings season in three years. However concerns over longevity of growth and deflation continue. Three wise themes of yield, quality, and large cap are the best places to hide in European stocks ,” said Manish Kabra, European equity and quantitative strategist.

Japan – most positive outlook since 2005: Japanese equities have seen a second big pick up in allocations in consecutive months, and the trend is likely to continue. A net 45% of global asset allocators are overweight Japan, a rise from a net 32% in October and a net 23% in September.

Japan is also the most favored region for the coming year. A net 27% of the investor panel says that Japan is the region they are most likely to overweight in the next 12 months. This represents a nine-year high and a rise from a net 14% in October.

Conviction over Japan appears to be underpinned by a belief in the profit outlook and a view that the country’s stocks are undervalued. A net 26% of respondents identified Japan as having the most favorable profit outlook for the year ahead – a rise of 10%age points month-on-month. And a net 17% say that Japanese equities are the most undervalued in the world.

As they assess Japan’s outlook, investors are weighing up the prospect of the yen suffering more depreciation in the coming year than the euro or dollar. A net 57% of the global panel expects the yen to fall in value on a trade-weighted basis. This, however, could make Japanese exporters attractive. The regional survey highlights how three of Japan’s largest exporting sectors – technology, industrials and autos – are the most favored by local investors.

Risk appetite overcomes fear of tail-risks: Investors have marked out deflation as the biggest risk to the market’s upward trajectory. Twenty-nine% of the global panel said that eurozone deflation is the biggest “tail risk,” ahead of geopolitical crisis (21%). Furthermore, asked in a new question what is the greatest risk in 2015, 71% opted for deflation over inflation.

But while deflation is a concern, they don’t appear to see it as the most likely outcome. A net 35% of investors have said that they expect global core inflation to pick up over the year ahead.

Confused signals over European equities and concern over France: Investors appear unsure how to treat European equities. Global asset allocators increased their moderate overweight positions slightly this month – a net 8% are now overweight the region. But investors have also indicated that they would like to underweight the region in the coming 12 months. Meanwhile, investors inside Europe have indicated optimism over the region’s prospects for improving growth and profits – a net 62% of the regional respondents forecast improving earnings per share for the coming year, up from a net 32% in October. But, they have increased cash holdings in the past month and have indicated a growing appetite to underweight France and scale back holdings in Italy.

An overall total of 214 panelists with US$569bn of assets under management participated in the survey from 7 November to 13 November 2014. A total of 166 managers, managing $431bn, participated in the global survey. A total of 111 managers, managing $252bn, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Global Research with the help of market research company TNS.

© Copyright 2011 by Finfacts.com

Top of Page

Global Economy
Latest Headlines
Strong Swiss franc gloom deepens for exporters
Global investors shift focus to China; EM outflows surge to $1tn in 13 months
Global oil glut will continue into 2016
Stable growth momentum in OECD area but slowing expected in China
Prices for major food commodities in July lowest since September 2009
Global manufacturing in July weakest level in two years
US, China and UK lead top 25 target countries for foreign direct investment
Budget surpluses rare in developed countries from 1980s; Italy, France, Greece had none in 60 and 40 years
Singapore, London and Shanghai top cities for new FDI projects in 2014; Dublin in 11th place
Exchange rates shuffle as Dublin ranked 49th most expensive city; Paris at 46; Berlin at 105
Western consumer groups under pressure in China and India
Developing countries facing “structural slowdown” likely to last for years
OECD BEPS Tax Project: Amazon books UK sales in UK; Australia proposes up to 100% in penalties
Emerging Markets Index falls to 12-month low in May as manufacturing contracts
US and world economies slowing in 2015 — OECD
Global manufacturing production rose slightly in May; Trade flows weak
GDP growth in OECD area slowed to 0.3% in the first quarter of 2015
Only one quarter of workers worldwide have stable employment contracts
Automatic Exchange of Tax Information: OECD says countries won't be able to game system
Gates Foundation loses in Swiss family's shares coup
Minimum wage levels in OECD countries
Brent oil benchmark over $68 a barrel - up almost 50% in 2015
Global growth slows and manufacturing dips to 21-month low
Family-controlled firms dominate European business
Top 10 of world’s 250 largest consumer products companies account for 30% of sales
Nine of world's 20 fastest growing economies in Africa
Globalisation maybe stalling as trade growth remains weak
Global growth prospects uneven across major economies says IMF
Emerging markets growth lowest since 2009; Global growth at 30-year average
China's economic rebalancing hitting Latin American economies
New York, London, HK & Singapore top global financial centres index; Dublin recovers
Global growth in modest expansion from low oil prices/ monetary easing says OECD
Composite leading indicators point to positive change in growth momentum in the Eurozone
Global labour market trends portend paradise for some but uncertainty for many workers
Vienna remains top of World Quality of Living Rankings in 2015; Dublin at 34
Zurich and Geneva overtake Singapore to become world's most expensive cities
HSBC Switzerland and Falciani: How it happened
Global economic power to continue shift from advanced economies
Global food price index falls in January; Cereal output set for record
Global debt has risen $57tn or 17% of world GDP since 2007