BofA Merrill Lynch Fund Manager Survey Finds Weakening Outlook for Global Economy Amid Fears Over China

Record Low Sentiment Towards Emerging Markets and Energy Sector

NEW YORK--()--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.

  • China recession is now rated the number one “tail risk” by 52 percent of panel.
  • Fifty-three percent of investors say the global economy will strengthen in coming year, down from 61 percent in July.
  • The survey reports the lowest allocations to emerging markets equities since April 2001 and to the Energy sector since February 2002.
  • More investors say Global Emerging Markets is the region they most want to underweight; Europe is the region they most want to overweight.
  • The survey notes a rising consensus that the Fed will raise rates in third quarter; the majority of panel now expects the yield curve to flatten in next 12 months.
  • An anti-commodities stance is evident with moves out of Energy and Materials, while defensive weightings increase.

“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.

Fund Manager Survey
An overall total of 202 panelists with US$574 billion of assets under management participated in the survey from 7 August to 13 August 2015. A total of 162 managers, managing US$449 billion, participated in the global survey. A total of 100 managers, managing US$224 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Global Research with the help of market research company TNS. Through its international network in more than 50 countries, TNS provides market information services in over 80 countries to national and multi-national organizations. It is ranked as the fourth-largest market information group in the world.

BofA Merrill Lynch Global Research
The BofA Merrill Lynch Global Research franchise covers almost 3,400 stocks and 1,200 credits globally and ranks in the top tier in many external surveys. Most recently, the group was named Top Global Research Firm of 2014 by Institutional Investor magazine; No. 1 in the 2015 Institutional Investor Latin America survey; No. 1 in the Institutional Investor 2015 Emerging EMEA Survey; No. 2 in the 2015 Institutional Investor All-Asia survey; and No. 2 in the 2015 All-America Fixed Income survey for the fourth consecutive year. The group was also named No. 2 in the 2014 Institutional Investor All-America survey and No. 2 in the 2014 All-China survey.

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Contacts

Reporters May Contact:
Melissa Anchan, Bank of America, 1.646.855.3152
melissa.anchan@bankofamerica.com
Tomos Rhys Edwards, Bank of America, +44.20.7995.2763
tomos.edwards@baml.com