Global investors have shifted their attention from Greece to China amid continued concern of a Chinese recession, according to the BofA Merrill Lynch Fund Manager Survey for August. Respondents are scaling back their expectations for economic growth. Meanwhile, the Financial Times reports that "a surge of capital gushing out of emerging markets (EM) has risen toward $1tn over the past 13 months, roughly double the amount that fled during the financial crisis amid slumping confidence in the world’s developing economies."
"Investors are sending a clear message that they are positioned for lower growth in China and emerging markets” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
“European stocks remain in favour – but investors like domestically focused names and are avoiding anything exposed to China or commodities,” said James Barty, head of European equity strategy.
The FT reports that total net capital outflows from the 19 largest emerging market economies reached $940.2bn in the 13 months to the end of July, almost double the net $480bn that flowed out during three quarters during the 2008/09 financial crisis, according to a compilation of official data and estimates by NN Investment Partners, an investment bank.
The bank reported that in the period July 2009-June 2014 a net $2tn had flowed into these markets.
Data from Capital Economics show that in June as currencies of some EM economies fell to their lowest levels versus the US dollar since the Asian crisis of 1997/98, imports had dipped 13.2% year-on-year.
CNBC says that not all fund managers are actively shunning emerging markets, with Jean Medecin, a member of investment committee at Carmignac, France's largest independent asset manager by funds under management, describing the current investment climate as a "stock-pickers market".
An overall total of 202 panelists with US$574bn of assets under management participated in the BofA Merrill Lynch survey from 7 August to 13 August 2015. A total of 162 managers, managing $449bn, participated in the global survey. A total of 100 managers, managing $224bn, participated in the regional surveys.
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