There are also signs that asset allocators are starting to prefer European equities to US stocks, as concerns over the fiscal cliff continue to outweigh worries about the eurozone debt crisis.
December’s BofA ML Global Fund Manager Survey found a net 40% of fund managers expect the global economy to strengthen over the coming year. This is a six percentage point increase on November and double the reading from two months ago, taking the indicator to a 22-month high.
Emerging markets are the preferred region for those surveyed in the research. A net 38% of asset allocators are now overweight emerging markets, which is double the number reporting this at the end of the third quarter.
Fund manager optimism about the Chinese economy has advanced to the highest level recorded by the survey, with a 67% expecting it to strengthen in the coming 12 months. This has risen from just over half in October.
Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, said: “The bulls are back in China, while policymakers elsewhere put bears onto the back foot. If the bulls are to claim a decisive victory, we need hard evidence that the economy is reaccelerating.”
The overweight to US equities dropped from a net 11% to 5% over the opening weeks of December as investors stayed cautious until there was more clarity about the fiscal cliff. The overweight to eurozone equities, on the other hand, moved from a net 1% to 7%.
Some 47% of respondents cited the US fiscal cliff as their biggest tail risk during December’s survey, down from 54% in November. Just 22% are worried by the eurozone debt crisis, falling from 25% last month.
The BofA ML Global Fund Manager Survey was carried out between 7 and 13 December and surveyed 193 participants with combined assets under management of $503bn.
