Recession threat dampens inflation fears
EUROPE - European fund managers are looking to healthcare stocks as a safe haven as risk appetite plumments, according to Merrill Lynch.
Managers have started reassessing inflation risks as secondary to the effects of economic contraction, according to the investment bank.
In its latest Survey of Fund Managers, Merrill Lynch gauges that inflation is perceived as less of a problem than previously, as a net 24% of respondents forecast that inflation will fall over the coming 12 months, down from 32% one months ago.
That said, the survey, which polled the opinions of 191 fund managers globally who manage a total of $610bn (€384bn), shows that risk appetite among institutional investors has hit rock bottom as the recession loom increases, with almost all respondents stating they believe Europe's economy will weaken over the next 12 months.
The survey shows that particularly emerging market equities have lost out on healthcare stocks - according to Merrill Lynch a traditional safe haven from wider economic trends - as a third of investors in Europe have a net overweight position in healthcare and pharmaceuticals, compared with none in June.
Karen Olney, chief European equities strategist at Merrill Lynch, said: "What investors are looking for right now is immunity from the ills of the market place and the healthcare sector provides that."
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