BofAML survey shows fund manager optimism tempered amid high oil prices and Chinese uncertainty
A record number of investors are calling on companies to increase capital spending amid high corporate cash levels and sustained optimism over the economic outlook, according to the Bank of America Merrill Lynch (BofAML).
A net 63 percent of investors in the June global fund managers’ survey say they want companies to boost capital spending, up from 60 percent last month and 58 percent in the April survey, according to a BofAML press release.
The survey also shows that, while investors have generally maintained a heightened appetite for risk, their outlook for the pace of growth has worsened slightly. A net 66 percent of investors expect the economy to strengthen over the next 12 months but a net 78 percent predict the pace of growth to slow amid high oil prices and an uncertain Chinese economic outlook.
Investors’ average cash holdings fell to 4.5 percent of their portfolios this month from 5 percent in last month’s survey as investors place more money into equities in a search for higher returns. A net 48 percent report that they are now overweight equities, an increase from 37 percent last month, even as a net 15 percent say equities are overvalued.
‘Although fund inflows and oil prices argue for near-term consolidation, the case for a summer melt-up remains stronger than for a melt-down as high liquidity and low growth force investor cash levels down,’ Michael Hartnett, chief investment strategist at BofAML Global Research, says in the statement.
Investor optimism over European stocks waned in June, with the number of fund managers saying they will overweight European equities over the next year falling to 21 percent from 28 percent in May. Some 42 percent of investors also say they expect quantitative easing by the European Central Bank (ECB) in the fourth quarter of this year or sometime next year, while 22 percent predict no action by the ECB.
