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Sep 17, 2020

Investors most bullish since start of pandemic, notes BofA survey

Investors urge caution despite growth prediction as tech, Covid-19 and US election top list of concerns

It’s ‘no longer a recession’, according to the Bank of America (BofA) September Global Fund Manager Survey, with more investors (49 percent) saying the macro situation is in an early-cycle phase than in recession (37 percent). This is the first time this has happened since February when global lockdowns due to the Covid-19 pandemic were barely on the horizon.

Fifty-eight percent of BofA survey respondents now say a new bull market has begun, up from 25 percent in May, with a net 84 percent predicting global growth in the next 12 months.

This translates into a growing demand for companies to increase capex, something 37 percent of investors now want to see, compared with just 13 percent in April. But with a ‘tech bubble’ cited as the number two tail risk among survey respondents after a second wave of Covid-19 (and the US election in third place), balance-sheet discipline remains key for just over half of investors (51 percent).

The bank also asked its respondents when they thought a credible vaccine would be available: most (39 percent) predict Q1 2021, while 32 percent say Q4 2020.

With the survey respondents calling long US tech the most ‘crowded trade’ of all-time (80 percent), the September study shows a ‘rotation’ toward more cyclical stocks, notes BofA: a decrease in allocation to tech, healthcare and large caps and an increase to industrials – to the highest overweight level since January 2018 – small caps and value stocks.

There is no evidence of regional rotation, however, with a preference for US equities over Europe, the UK and emerging markets. In fact, a net 35 percent of investors are underweight UK equities, the lowest level since March 2018.

The survey is based on responses from a panel of 224 investors representing around $646 bn.

Garnet Roach

Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of subjects, from technology to...

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