Investors are at their most bearish on the global economy since 2012, according to survey data published by Bank of America Merrill Lynch today.
The difference between the percentage of fund managers who said the economy would strengthen over the next 12 months and those that said it would not was eight per cent. The net balance of eight per cent was the lowest for four years. The survey covered 211 panellists with a collective $610bn of assets under management.
However, growth is expected to slow rather than plummet with only 12 per cent of fund managers saying a global recession will occur in the next year.
Companies are expected to suffer, more investors believe global profits will decline over the next 12 months than increase, the first negative reading in more than three years. A sign of the bearish times is a rise in demand to hold cash. Average cash balances are up to 5.4 percent, the third-highest reading since 2009.
“Investors are not yet ‘max bearish’. They have yet to accept that we are already well into a normal, cyclical recession/bear market,” said Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch Global Research.
Fund managers were optimistic on European and Japanese stock markets, despite the fact bearishness on emerging market stocks had risen to a record level.