Potential bubbles are a growing concern

Chris Papadopoullos
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INVESTORS are concerned about bubbles in both bonds and equities, according to survey figures released yesterday by Bank of America Merrill Lynch.

The proportion of global investors that believed equity markets are overvalued rose to a net 25 per cent – the highest level since 2000. However, it remains short of the 1999’s net 42 per cent.

Similarly, the proportion of respondents who thought that bond markets are overvalued reached a survey high at net 84 per cent, up from net 75 per cent in March. Many countries, especially in Europe, have seen bond prices rise so much that the interest on their government debt – which moves inversely to the price of bonds – has fallen below zero.

“April’s survey offers further proof that global investors are front-running global monetary policy,” said Michael Hartnett, chief investment strategist at the bank’s research unit.