(September 18, 2013) — Confidence in the European Union and its equities has reached pre-crisis highs, a monthly survey of asset allocators has found.
Allocations to Eurozone equities have reached their highest level since May 2007, the Bank of America Merrill Lynch fund manager survey found. A net 36% of global asset allocators said they were overweight the region, more than twice the net 17% recorded in August.
Additionally, an all-time high—a net 12%—of asset allocators said they were overweight UK equities.
Their confidence in the region looks to be set to continue, with a net 27% of investors telling the bank that the Eurozone is the region they would most like to overweight in the coming 12 months: the highest reading since May 2007.
There has been a swift turnaround in sentiment. Barely a net 2% said they wished to overweight the region in July.
“Belief in Europe’s economy is robust and though Eurozone equities have come back strongly, value remains the best on offer in developed world markets,” said John Bilton, European investment strategist at BofA Merrill Lynch Global Research.
The warm glow of Europe is not reflected elsewhere. Investors are holding increasing levels of cash, the survey found, and eight out of 10 of them said they thought the global economy would grow at a below-trend rate over the next 12 months.
“Investor cash levels remain high because the fear of bond markets is greater than the appetite in equity markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
Emerging markets are still not on investors’ shopping lists, despite many of them viewing them as cheap, but the report did show asset allocators were slowing decreasing underweight positions in the asset class.
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