{"id":40197,"date":"2015-02-18T01:37:30","date_gmt":"2015-02-18T00:37:30","guid":{"rendered":"http:\/\/beta.next-finance.net\/note\/bofa-merrill-lynch-fund-manager-survey-finds-investors-exuberantly-bullish-on-europe-after-promise-of-ecb-action\/"},"modified":"2015-02-18T01:37:30","modified_gmt":"2015-02-18T00:37:30","slug":"bofa-merrill-lynch-fund-manager-survey-finds-investors-exuberantly-bullish-on-europe-after-promise-of-ecb-action","status":"publish","type":"post","link":"http:\/\/beta.next-finance.net\/en\/note\/bofa-merrill-lynch-fund-manager-survey-finds-investors-exuberantly-bullish-on-europe-after-promise-of-ecb-action\/","title":{"rendered":"BofA Merrill Lynch Fund Manager Survey Finds Investors Exuberantly Bullish on Europe After Promise of ECB Action"},"content":{"rendered":"

Weakening Expectations in China Limit Impact on Global Growth Outlook<\/strong> <\/em><\/p>\n

Global investors are significantly more positive on the
\noutlook for Europe after the European Central Bank\u2019s announcement of quantitative
\neasing to reflate the region\u2019s economy, according to the BofA Merrill Lynch Fund
\nManager Survey for February.<\/p>\n

Europe\u2019s profit outlook is at its best since 2009, according to panel members. A net
\n81 percent of regional specialists see the economy strengthening in the next year.
\nAgainst this background, a record net 51 percent make the region their top pick in
\nequities over a one-year horizon, up from January\u2019s net 18 percent. A net 55 percent
\nare already overweight.<\/p>\n

The U.S. has been the main loser from this rotation. Overweights on U.S. equities
\nhave declined to a net 6 percent, down 18 points versus last month.<\/p>\n

Overall, fund managers have increased their allocations both to stocks (a net 57
\npercent overweight, up six points month-on-month) and cash (a net 22 percent
\noverweight, a five-point rise). This is at the expense of bonds, which are now seen
\nas overvalued by a net 79 percent. Bonds are also perceived as the asset class most
\nvulnerable to increased volatility this year.<\/p>\n

Despite exuberance over Europe, the global growth outlook is little changed. This
\nreflects declining expectations on China. A net 58 percent of respondents now
\nexpect that country\u2019s economy to weaken over the next 12 months, the survey\u2019s
\nlowest reading on this measure in nearly two years.<\/p>\n

\u201cThe ECB has successfully vanquished global deflation fears and induced the return
\nof reflation trades in February,\u201d<\/em> said Michael Hartnett, chief investment strategist at
\nBofA Merrill Lynch Research. \u201cSentiment has gotten ahead of the fundamentals on
\nEuropean equities. It is as if there is not a single bear left. We will need to see a
\nstrong recovery very soon to keep the bulls happy,\u201d<\/em> said Manish Kabra, European
\nequity and quantitative strategist.<\/p>\n

Eurozone only<\/h2>\n

Investors\u2019 new bullishness on Europe is strongly focused on the Eurozone. Non-Euro
\nmarkets are out of favor. Last month, France and Italy stood out as their worst picks,
\nbut a net 42 percent of regional fund managers now intend to underweight the U.K.
\nand Switzerland this year. They have also shifted to a negative stance on Sweden.<\/p>\n

Autos are now European regional investors\u2019 favored sector. A net 26 percent are
\noverweight, a month-on-month gain of 12 percentage points. The travel and leisure
\narea has also gained support with a 10-point rise.<\/p>\n

In contrast, banks and insurers saw notable declines in sentiment. Month-on-month
\nfalls of 32 and 20 percentage points, respectively, have taken both into underweight
\nterritory. Utilities are now the region\u2019s least favored sector.<\/p>\n

Inflation fuelled<\/h2>\n

Anxiety over potential Eurozone deflation has declined with the ECB\u2019s QE
\nannouncement. Indeed, inflation expectations are picking up. A net 29 percent of
\nfund managers expect global core CPI to be higher in a year\u2019s time, up from a net 14
\npercent a month ago.<\/p>\n

A potential geopolitical crisis is now clearly respondents\u2019 major tail risk. One in three
\nidentifies it as their major concern.
\nGold glisters again
\nChina\u2019s weakening outlook is weighing on Global Emerging Markets equities, but net
\nunderweights on GEMs have declined by 12 percentage points since January to a
\nnet 1 percent.<\/p>\n

Sentiment towards gold is also improving. Forty percent of survey participants expect
\nthe price to be higher in 12 months\u2019 time. Last month, bears on the precious metal
\nstill outnumbered bulls.<\/p>\n

Only a net 3 percent now considers gold overvalued, compared to a net 20 percent
\nas recently as December.
\nMany investors continue to see value in oil. A net 39 percent regard crude as
\nundervalued, down slightly from January\u2019s reading. <\/p>\n","protected":false},"excerpt":{"rendered":"

Global investors are significantly more positive on the
\noutlook for Europe after the European Central Bank\u2019s announcement of quantitative
\neasing to reflate the region\u2019s economy, according to the BofA Merrill Lynch Fund
\nManager Survey for February.<\/p>\n","protected":false},"author":20,"featured_media":40195,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1481],"tags":[1809,1655,1657,1651,1437,1999,2091],"_links":{"self":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/40197"}],"collection":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/comments?post=40197"}],"version-history":[{"count":0,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/posts\/40197\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media\/40195"}],"wp:attachment":[{"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/media?parent=40197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/categories?post=40197"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/beta.next-finance.net\/en\/wp-json\/wp\/v2\/tags?post=40197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}