Focus on Asia – Confidence in China’s economy to three-year high, BAML survey finds

Confidence in the outlook for China’s economy surged to a three-year high, on the back of broader optimism on the global economy and equity markets, according to a survey on 248 fund managers with $695bn assets under management run by Bank of America Merrill Lynch (BAML) in November.

About half of the investors polled by the firm and based in across Asia Pacific, Global Emerging Markets and Japan believed that China’s economy will strengthen in the coming year, the highest number since July 2009.

“The monthly increase of 46 percentage points, from a net 5% in October, represents the largest single-month increase since February 2009,” the bank said.

Investors and asset allocators are showing appetite for a greater exposure to emerging markets. A net 37% of allocators are overweight Global Emerging Market equities, up from a net 32% in October.

Moreover, a net 30% of investors said that Global Emerging Markets is the region that they would most like to overweight in the coming year, up from a net 22% in October.

Shifts in sector allocations reflected a growing appetite for equities with exposure to emerging markets, especially China.

“The proportion of European investors overweight Automotives & Parts and Basic Resources rose by a net 11 and 21 percentage points respectively,” the survey found.

Meanwhile, while domestic investors are increasingly hopeful about Japan’s prospects, global investors remained cautious on the Japanese outlook.

A net 18% of Japanese investors expected the economy to strengthen in the coming year, compared with a net 30% forecasting deterioration in October.

“Global investors are far from convinced that Japan’s outlook is improving. Asset allocators have moderately scaled back underweight positions in Japanese equities. A net 34 percent are underweight the region this month, down from a net 38 percent in October, but still a historically bearish position,” the bank added.

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