Merill Lynch, the Bank of America’s (BofA) wealth management division, released on Tuesday the results of its Fund Manager Survey for August.
It showed a weakening outlook for the global economy amid fears over China, recording low sentiment towards emerging markets and the energy sector.
While the concern over a Chinese recession continues, global investors have shifted their attention from Greece to China, the survey revealed, noting that respondents are diminishing their expectations for Chinese economic growth.
The survey also showed that 52% of respondents see China’s recession as the number one “tail risk”. This refers to the risk of an asset, or portfolio of assets, moving more than three standard deviations from its current price.
Moreover, the number of investors saying that the global economy will strengthen in the next year has decreased to record 53% in August, compared to 61% in the July survey.
The survey also reported the lowest allocations in investments in emerging markets since April 2001, while energy sector allocations recorded their lowest rates since February 2002.
More investors are willing to decrease their investments in Global Emerging Markets, while Europe is the region in which they most want to increase investments.
Furthermore, the survey added that most of the respondents said that the American Federal Bank will raise the rate of its essential interests in the third quarter of the current year. The majority of the survey panel expects the return on investment curve to stabilise over the next 12 months.
The trend in investors exiting from the initial commodities companies’ stocks became evident as a result of the moves away from energy and materials companies, while demand on defensive weightings increased, according to the survey.
“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 survey, taking place from 7 to 13 August 2015, included an overall total of 202 panellists with $574bn of assets under management.
