(April 16, 2013) — Investors have pulled back from the bullish stance they demonstrated earlier in the year and are hoarding their largest cash piles in six months, a survey has found.
Bank of America Merrill Lynch’s monthly survey found asset allocators demonstrated “lower conviction” this month, with assets moving out of emerging markets and the Eurozone.
A small majority of investors described themselves as underweight emerging markets, as the survey showed the weakest reading on the asset class in over two years.
China, in particular, has set investors packing. “Bullishness on China is evaporating,” the bank’s analysts said. “A net 13% of regional investors now expect the country’s economy to strengthen in the next 12 months, down from a net 71% as recently as January.” Sentiment has not been so cautionary on China since October.
In the same region, Japan received much greater adulation, the survey said. Every asset allocator expected its economy to strengthen over the next 12 months, while most thought the country’s fiscal policy would weaken the yen. This meant appetite for the currency was at the lowest since February 2002.
The big favourite, however, is the US dollar. Appetite for exposure to the currency hit its highest level since the survey began, at the start of the last decade. There was even an increase in hunger for the currency from last month when a net 72% of respondents said they were bullish on the US currency. This was an abrupt change in sentiment from February.
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