GLOBAL- European fund managers have succumbed to the same bearishness as their colleagues worldwide, Merrill Lynch’s monthly survey of fund managers has found.
The survey - based on the opinions of 293 managers worldwide - reveals that expectations for economic growth and corporate profits have tumbled in Europe and the rest of the world.
The firm’s global strategist Sarah Franks said there was an “outbreak of bearishness”. She said there was a “race to the bottom” in terms of the expectations for economic growth in the euro-zone - although among global investors the perception of euro-zone equities has improved.
Only 54% of European managers look forward to a stronger economy in a year’s time, 21 percentage points less than June and the lowest since May 2003.
The fundamentals of the euro-zone banking sector are seeing as improving by 21% of those polled, down five percentage points since July.
Twenty nine percent of European panellists, nearly half last month’s figure, believe profits are set to improve in the next 12 months and one in four fund managers are overweight in cash in August, compared with July’s 10%.
David Bowers, Merrill’s chief global investment strategist, told a briefing that managers worldwide are raising their cash allocation.
He said: “There is a veritable collapse in expectations, they are abandoning corporate earnings and focusing on cash.”
Bowers added that – for the first time since the survey started – managers want companies to return cash to shareholders. “It is a case of show me the money.”