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Investors optimistic of Global Economy but “hesitating”

Posted on: March 20, 2009

Bernama – Friday, March 20

KUALA LUMPUR, March 19 (Bernama) — Investors want to believe in an economic recovery but the prolonged financial crisis and caution on banks seems to be stopping them from putting cash into equities, according to Meryll Lynch Survey of Fund Managers for March.

Michael Hartnett, Banc of America Securities-Meryll Lynch co head of international investment strategy, said how the investors resolve the anomaly between growth optimism and risk reluctance would determine the fate of equity markets this spring.

In a statement issued in New York and London, the survey said that for the first time in more than three years, investors do not predict lower global economic growth over the next 12 months, with renewed optimism about China’s economy at the heart of it.

It said that just two months ago, a net 70 percent of respondents thought China’s economy would worsen in the year ahead, but it fell to a net one percent this month.

However, risk appetite has dropped with investor pessimism towards banks at a record high, with respondents noticeably bearish about Japanses and eurozone equities.

A net 48 percent of asset allocators said they were underweight banks this month, up from a net 39 percent in February while 22 percent said they were aggresively underweight banks versus 17 percent in the same period.

Meanwhile, a net 40 percent of respondents were now underweight eurozone equities and a net 39 percent were underweight Japanese equities.

Hartnett noted that optimism on growth has been expressed with higher weightings in emerging markets equities and commodities.

“Investors might look to review their extreme underweight positions in eurozone and Japanese equities if the economic data follow growth expectations higher,” he said. — BERNAMA



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