Investors are the most bullish on Japanese stocks for more than six years, while they are selling euro-area equities amid renewed concern about the region’s debt crisis, a Bank of America Corp. survey showed.
A net 20 percent of global money managers, who together oversee about $578 billion, said they were overweight Japan this month, the highest proportion since 2006 as Prime Minister Shinzo Abe increased stimulus in the world’s third-biggest economy. A net 8 percent said they held less euro-region equities than benchmark indexes for the first time in eight months. Managers’ allocations to U.S. equities jumped to the highest level since June.
“Abenomics signals that Japanese policy makers are joining the fight against deflation,” Michael Hartnett, Bank of America’s chief global strategist in New York, said in a report today. “This reinforces our expectation of a great rotation into equities from fixed income.”
Fund managers cited deflation in European Union economies as the biggest risk to investing, the survey showed. The Euro Stoxx 50 Index has slipped 4.3 percent from its high on March 14 as Cyprus had to impose losses on the largest depositors in its banks as a precondition for a bailout from the EU.
Investors cut their total allocations in equities for the first time in eight months, the survey showed. A net 47 percent said they were overweight the asset class in April, compared with a two-year high of 57 percent in March.
Stocks fell around the world this week as a report showed China’s economy grew more slowly than forecast. The MSCI All-Country World Index has dropped 1.8 percent so far this week. The Standard & Poor’s 500 Index slumped 2.3 percent yesterday, its biggest retreat in five months.
“Positioning has slumped a lot more quickly than the measures of risk at a sentiment level,” John Bilton, European investment strategist at Bank of America’s Merrill Lynch unit, said at a press conference in London today. “This does seem like a bearish survey.”
Emerging-market equities fell out of favor with investors, as they cut their holdings to an 18-month low. About 13 percent of money managers were overweight in the shares.
Bank of America conducted the survey of 200 professional investors between April 5 and 11.