Global fund managers upbeat on emerging marts

New Delhi, Press Trust of India:

According to the Merrill Lynch Survey of fund managers for May, bullishness in global markets has reached new heights with seven out of 10 investors predicting the world economy would improve in the next twelve months.

Cut in cash-balances

Many fund managers are rushing to emerging markets the survey stated, adding that investor optimism on China’s economy is higher than at any point in the past six years.
“Investors are finally opening their wallets and reducing cash balances to mid-cycle levels to buy equities, cyclical stocks and risky assets,” Banc of America Securities-Merrill Lynch co-head of international investment strategy Michael Hartnett said.

Heightened appetite for equities is concentrated on emerging markets, with 46 per cent investors overweight on emerging market stocks, up from 26 per cent in April, the survey revealed.

“However, this rush to take on risk, especially in emerging markets, is reminiscent of bubble-like behavior,” Hartnett added.Bullishness about China’s economy has reached its highest level since the survey began tracking it in 2003.

Bet on China

The survey further pointed out that 61 per cent of respondents see China’s economy improving against 87 per cent expecting the Chinese economy to weaken in November.
Portfolio managers’ optimism is backed by positive expectations on corporate profits and they are putting their money to work, the survey stated.

The average cash holdings have fallen to 4.3 per cent in May 2009 from 4.9 per cent in April 2009.

About 220 fund managers, managing a total of US$617 billion, participated in the global survey for May conducted by Banc of America Securities–Merrill Lynch Research with the help of market research company TNS.