Merrill Lynch Fund Manager Survey Finds Risk Appetite Returning as Aversion to
Banks Eases
NEW YORK and LONDON, Apr. 16 /PRNewswire-AsiaNet/ --
Global economic optimism at highest since 2004
Risk appetite has started to pick up on the back of improving global
economic sentiment, according to the Merrill Lynch Survey of Fund Managers
for April. Optimism about growth has reached its highest level since early
2004. A net 26 percent of respondents say the global economy will strengthen
in the next 12 months, up sharply from negative 24 percent in January.
In contrast to March, investors are starting to act on the improving
outlook and are unwinding previously-entrenched, bearish positions. A vital
difference is that investor pessimism on bank stocks has started to recede.
The net percentage of respondents underweight banks swung significantly in
April to a net 26 percent from 48 percent in March. The net percentage of
investors overweight cash fell to 28 percent from 41 percent in March. Just
17 percent of respondents are underweight equities compared with 41 percent
in March. Asset allocators are turning towards cyclical sectors, such as
technology.
"Improving sentiment on financials has decisively removed the log jam on
sector rotation," said Gary Baker, co-head of international investment
strategy at Banc of America Securities-Merrill Lynch Research. "This is
enabling broader optimism about growth to feed into greater risk appetite and
prompting a march out of defensives into cyclicals."
Michael Hartnett, co-head of international investment strategy at Banc of
America Securities-Merrill Lynch Research said: "The consensus has shifted
from apocalyptically bearish to reluctantly bullish. But it's important to
note that asset allocators are still underweight equities, indicating they
have yet to fully embrace the idea of a new bull market."
Bullishness towards China at six-year high
China continues to be a beacon of hope for the global economy. Portfolio
managers are more optimistic on Chinese growth that at any point since 2003.
A net 26 percent of respondents believe Chinese economic growth will
accelerate over the next 12 months. As recently as November, 85 percent
expected it to decelerate.
"Investors looking to play the global recovery are using China and
emerging markets, rather than Europe or Japan, to do so," said Hartnett.
Thanks largely to China's influence, global emerging markets have been
the prime beneficiary of improving sentiment towards equities with a net 26
percent of asset allocators saying they are overweight the asset class, up
from just 4 percent in March. Commodities, integral to emerging market
growth, are increasing in popularity. A net 4 percent of asset allocators are
overweight the asset class -- the first net overweight reading since August
of last year.
After emerging markets, the U.S. is investors' other preferred location.
A net 18 percent of respondents say that they would most like to overweight
U.S. equities with a 12-month view. Europe and Japan are the least favored
with a net 18 percent who say they would most like to underweight their
equity markets.
Sector allocations mark end of extreme positioning
April's survey shows strong evidence that investors have started to
emerge from the recessionary rut that led them to take extreme asset
allocations for protection. In addition to reducing underweight positions in
banks, asset allocators have begun moving back towards traditional cyclical
sectors.
Technology has become the most popular sector, with a net 27 percent of
respondents overweight. Pharmaceuticals, the favorite in March and a classic
bear market refuge, has seen a drop in popularity from 30 percent overweight
to 21 percent. A net 17 percent are underweight industrials, down from a net
31 percent in March. Asset allocators are neutral on materials, compared with
a net 10 percent who were underweight in March.
Survey of Fund Managers
A total of 214 fund managers, managing a total of US$561 billion,
participated in the global survey from April 2 to April 8. A total of 181
managers, managing US$356 billion, participated in the regional surveys. The
survey was conducted by Banc of America Securities-Merrill Lynch Research
with the help of market research company TNS. Through its international
network in more than 50 countries, TNS provides market information services
in over 80 countries to national and multi-national organizations. It is
ranked as the fourth-largest market information group in the world.
Bank of America
Bank of America is one of the world's largest financial institutions,
serving individual consumers, small and middle market businesses and large
corporations with a full range of banking, investing, asset management and
other financial and risk-management products and services. The company
provides unmatched convenience in the United States, serving more than 59
million consumer and small business relationships with more than 6,100 retail
banking offices, nearly 18,700 ATMs and award-winning online banking with
nearly 29 million active users. Following the acquisition of Merrill Lynch on
January 1, 2009, Bank of America is among the world's leading wealth
management companies and is a global leader in corporate and investment
banking and trading across a broad range of asset classes serving
corporations, governments, institutions and individuals around the world.
Bank of America offers industry-leading support to more than 4 million small
business owners through a suite of innovative, easy-to-use online products
and services. The company serves clients in more than 150 countries. Bank of
America Corporation stock is a component of the Dow Jones Industrial Average
and is listed on the New York Stock Exchange. Many of the bank's services to
corporate and institutional clients are provided through its U.S. and UK
subsidiaries, including Banc of America Securities LLC, Banc of America
Securities Limited, Merrill Lynch, Pierce, Fenner and Smith Incorporated and
Merrill Lynch International. For additional information, visit
Merrill Lynch
Merrill Lynch is one of the world's leading wealth management, capital
markets and advisory companies, with offices in 40 countries and territories
and total client assets of approximately $1.2 trillion at December 26, 2008.
As an investment bank, it is a leading global trader and underwriter of
securities and derivatives across a broad range of asset classes and serves
as a strategic advisor to corporations, governments, institutions and
individuals worldwide. Merrill Lynch has approximately 50 percent ownership
in BlackRock Inc., one of the world's largest publicly traded investment
management companies, with approximately $1.3 trillion in assets under
management at December 31, 2008. For more information on Merrill Lynch,
please visit www.ml.com. Merrill Lynch was acquired by Bank of America on
January 1, 2009.
SOURCE: Banc of America Securities-Merrill Lynch
CONTACT: Susan McCabe Walley
+1-212-449-0389
susan_mccabe@ml.com
or Tomos Rhys Edwards
+44-20-7995-2763
tomos_edwards@ml.com,
both of Banc of America Securities-Merrill Lynch
Translations:
NEWS 
