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Fund managers lighten up on economy

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  • Fund managers lighten up on economy

GLOBAL - Investors are at their most hopeful about the year ahead, since the credit crunch took hold in July 2007, according to the latest fund manager survey by asset manager Merrill Lynch.

The report, surveying a total of 212 fund managers between 6 and 12 February, and who manage a total of $599bn (€471.4bn), suggested the number who forecast a worsening economy in the 12 months ahead fell to a net 6%, in comparison to 24% in January.

That said, the majority of fund managers said they recognise the world economy is in recession.

"Fears of a prolonged slowdown in China appear to be fading: the number of investors who predict lower growth in China over the coming 12 months has fallen sharply, to a net 21% in February from a net 70% in January," according to Merrill Lynch.

Similarly, severe pessimism about the outlook for corporate earnings has started to ease, as less fund managers expect to see deteriorating profits over the coming year.

A net 49% of the panel predicted inflation will fall over the coming 12 months, compared with 64%in January and 82%in December.

"Fund manager expectations for Chinese economic growth rose dramatically to their highest levels since 2007, and faint global decoupling hopes now reside solely with China," said Michael Hartnett, chief global emerging markets equity strategist at Banc of America Securities-Merrill Lynch Research.

Moreover, the survey predicts commodities are coming back as equity allocations shift into cyclicals.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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