Risk appetite plunges to lowest levels since early 2009

Investors expect Europe to fall into recession in the next 12 months, according to the BofA Merrill Lynch Survey of Fund Managers for September.

Fifty-five percent of European fund managers now see the region suffering two quarters of negative real GDP growth over the next year, according to the survey completed between September 1 and September 8. This compares with only 14 percent expecting the same fate as recently as July.

Europe’s sovereign and banking challenges dominate risks identified by global asset allocators. Sixty-eight percent of survey respondents now view the eurozone debt crisis as the largest of these risks, up from 43 percent in June and 60 percent in August. Sentiment towards European banks is at its lowest since the survey began asking about it in January 2003. Read more

MENA Markets Weekly

UAE stock markets ended the week on a negative note, with the Dubai Financial Market (DFM) being the top decliner out of both UAE stock markets. The market posted a loss of 1.96 percent to close at 1,581.81 points. The market was negatively affected by losses witnessed in the Utilities Sector and the Transportation Sector which ended the week down 9.46 percent and 4.33 percent, respectively. In addition, the Abu Dhabi Securities Exchange (ADX) also ended in the red zone, down 0.53 percent and closed at 2,645.02 points. The Energy Sector was the top decliner in the ADX for the week, posting a 7.78 percent drop and therefore playing a role in the market’s decline. Furthermore dragging down the market was the Real estate Sector, which ended the week down 3.69 percent. Fujairah Cement Industries was the top loser for this week declining 12.88 percent to end the week reaching AED1.150. Read more

Emerging markets to outperform developed markets into the future says Emirates NBD

• MENA region predicted to see inflow of international capital on the back of low valuation of markets and continuing high oil prices
• Strong returns for investors committing to ‘emerged’ markets
• Emirates NBD encourages MENA-based investors to bias asset holdings to emerging markets
• Growth potential to be impacted if emerging economies introduce substantial capital controls

Investors committing themselves to emerging markets can expect to see strong returns on their investments, according to Emirates NBD, a leading bank in the region.

According to the bank’s outlook, emerging markets will further outperform the developed markets in the future, and MENA-based investors should bias their asset holdings to the emerging and frontier markets away from the developed world, to obtain optimum returns on their investments. Read more

BofA Merrill Lynch Fund Manager Survey Finds Renewed Risk Appetite Spurs Rush Into Emerging Markets

Investors are channeling most of their renewed risk appetite into global emerging market equities (GEM) in the wake of an expected second wave of quantitative easing, according to the BofA Merrill Lynch Survey of Fund Managers for October.

The level of risk that investors are taking in their portfolios rose more sharply than in any month since April 2009. Hedge funds continued to add to their net equity exposure. The proportion of asset allocators overweight equities nearly tripled to a net 27 percent from a net 10 per cent in September, while they extended underweight positions in bonds. The proportion of portfolio managers overweight cash fell to a net 6 per cent from a net 18 per cent. Read more

BofA Merrill Lynch Fund Manager Survey finds renewed optimism over China, but risk appetite wanes

Investors have returned from holidays with a defensive mindset but fresh hopes are emerging about China’s economic prospects, according to the BofA Merrill Lynch Survey of Fund Managers for September.

Sentiment over the Chinese economy has swung from significantly bearish to bullish in just one month. A net 11 percent of respondents believe that the Chinese economy will strengthen over the next 12 months – a 30 percent swing and the largest positive monthly change since May 2009. In August a net 19 percent said that China’s economy would weaken. In July a net 39 percent were bearish over China. Read more

BofA Merrill Lynch Fund Manager Survey Finds Investor Confidence Eroded But Fears Over Euro Have Peaked

Record Move Out of Energy Stocks in Wake of Gulf Spill

Investors’ belief in global economic growth and the ability of corporations to improve profits has significantly eroded, according to the BofA Merrill Lynch Survey of Fund Managers for June.

The survey, conducted as global equities fell by 7.5 percent, shows only a net 24 percent of respondents believing the world economy will strengthen in the next 12 months, down from 42 percent in May and 61 percent in April. Global investors have expressed similar concerns over corporate profits. A net 28 percent of the panel believes that profits will improve in the coming 12 months, compared with 47 percent in May and 67 percent two months ago. The proportion of the panel expecting corporate operating margins to improve in the coming year has halved in the past two months to a net 19 percent. Read more