By Jason Corcoran in Moscow
Fund managers are pouring into emerging markets and are shifting away from China towards Russia, according to the Bank of America Securities-Merrill Lynch August survey.
Merrill Lynch’s Risk and Liquidity Indicator, a measure of risk appetite, rose to 41, the highest in two years, with investors preferring an overweight in emerging markets than any other region. Some growth optimism for China, one of the driving forces of the original turnaround, has dipped slightly, as investors shift towards Russia and away from China.
Investors would rather be overweight in emerging markets than any other region, and by some distance. A net 33% of the panel prefers to be overweight in emerging markets while investor consensus is to remain underweight in the developed economies of the US, the euro zone, the UK and Japan.
The fund manager survey, which polled 204 investors who manage a combined $554bn under management, showed equity overweight positions rose to a net 34% of their portfolios in August, their highest since October 2007, from 7% last month. Average cash balances have also fallen to 3.5% from 4.7%, which is their lowest level in two years.
Fund manager Market Mobius plans to double Templeton Asset Management emerging-market assets to $50bn within two years. China is the top pick of Mobius and many other managers with see it as the key catalyst to a global recovery.
Jerome Booth, head of research at Ashmore Investment, has caused waves with his recent suggestion investors should increase their level of exposure to emerging markets to 35-50% based on the share of global GDP.
