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Fund managers expect global growth to rise

“Investors are bullish, but not euphoric,” said Michael Hartnett, chief investment strategist at BofA.

ET Bureau|
Last Updated: Jan 22, 2020, 09.47 AM IST
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Global growth expectations have jumped 7 percentage points to net 36 per cent of investors polled indicating they expect global growth to improve over the next year.

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Mumbai: Fund managers are expecting an improvement in global growth going ahead but these expectations have not surged to boom levels, according to a global fund manager survey by Bank of America for January. Fund managers have completely priced out recession risks since June 2019 when BofA had released its most bearish fund manager survey since the global financial crisis. About 36 per cent of the fund managers expect strong global growth in the next 12 months but the survey said this is yet to hit levels consistent with a euphoric “boom”.

Global growth expectations have jumped 7 percentage points to net 36 per cent of investors polled indicating they expect global growth to improve over the next year, the highest level since February 2018.

About 19 per cent of fund managers surveyed now think the global economy will experience above-trend growth and belowtrend inflation and 62 per cent continue to expect below-trend growth and inflation. The survey took place between 9th and 16th January and saw participation of 249 fund managers with $739 billion in assets under management.

“Investors are bullish, but not euphoric,” said Michael Hartnett, chief investment strategist at BofA. “We stay irrationally bullish risk assets until peak positioning and peak liquidity incite a spike in global bond yields and ‘the big short’ opportunity.”

Overweight on equity has risen to 32 per cent in the January survey from 31 per cent earlier, according to the survey. Historically, a top in stocks has coincided with this number rising to more than 50 per cent.

Outcome of the US Presidential election is the biggest tail risk, according to 29 per cent of the fund managers while trade war and bond bubble pop are the other three risks.

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