A survey conducted by the Bank of America-Merrill Lynch has found that fund managers are betting big on Japanese equities while shying away from Eurozone stocks.
The survey found that Japan is reaping the benefits of investors? aversion to the Eurozone as doubts continue over the Greek government debt. A net 12% of global asset allocators are overweight on Japanese equities, the highest level since July 2007. In February, asset allocators were net underweight Japan. A net 18% of the panel is underweight on Eurozone equities.
Investors are more positive about the outlook for Japanese corporates. A small majority (net 3%) of the global panel says Japanese companies have the most favourable outlook of all regions, which was previously a minority view (a net negative 4 % in March).
?As recently as five months ago, investors regarded Europe as the most attractive place. But with the Greek debt crisis, Europe has become a no-go zone and asset allocators now view Japanese equities as a cleaner cyclical play,? said Patrik Schowitz, European Equity strategist at BofA Merrill Lynch Global Research. A total of 197 fund managers, managing a total of $546 billion, participated in the global survey and 161 managers, managing $359 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Research with the help of market research company TNS. The survey found that the number of investors taking ?above normal? risk in their portfolios is at its highest since January 2006, and investors are more bullish about the ability of companies to increase profitability.
?April?s survey shows a growing number of investors envisaging a Goldilocks scenario of above trend growth and benign inflation. The findings are consistent with the view that the US consumer, far from remaining in intensive care, is on the path back to good health,? said Michael Hartnett, chief Global Equities strategist at BofA Merrill Lynch Global Research.
Hardened bullishness towards corporate profits is underpinning belief in the recovery.