BofAML finds quieter bulls amid continuing fears

Apr 18, 2018
Only 18 percent of investors surveyed think equities have peaked

Bank of America Merrill Lynch’s (BofAML) April survey of global fund managers finds the bulls in the market have been quietened, but that widespread concerns remain.

The latest results come after 74 percent of investors polled in March said they believed the global economy was in the late-cycle stage, with the next stage being some form of downturn – the highest such level in the survey’s 24-year history.

In an indication that the end of the world is not nigh just yet, only 18 percent of investors surveyed this month think equities have already peaked, with 40 percent expecting a peak in the second half of 2018 and 39 percent thinking they will not peak until 2019 or later.

But the allocation to equities has fallen to an 18-month low of 29 percent, down from 41 percent in March, and the percentage of investors expecting profits to improve over the next 12 months has dropped to an 18-month low of just net 20 percent. In addition, the percentage of investors that would like to see corporates improve their balance sheets remains at an eight-year high: a record 33 percent think corporate balance sheets are over-leveraged.

The threat of a trade war (38 percent) remains top of the list of tail risks most commonly cited by investors, followed by a hawkish policy mistake by the Federal Reserve and/or European Central Bank (22 percent) and concerns that the market structure will cause illiquidity (10 percent).

‘The bulls have been silenced but not defeated,’ says Michael Hartnett, chief investment strategist at BofAML, in a statement. ‘But true bull capitulation is absent, with most investors saying the peak in the stock market is still to come.’

BofAML’s April survey includes 216 participants with $646 bn in assets under management.

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