|Copyright:||Copyright Business Wire 2010|
|Source:||Business Wire, Inc.|
U.S. Equities Thrive as Eurozone Loses Support
A net 44 percent of the respondents predict the world’s economy to strengthen in 2011, compared to 35 percent a month earlier. A net 51 percent anticipate corporate profits improving next year, up from 36 percent in November. At the same time, more investors believe that inflation is likely to rise with a net 61 percent of the panel forecasting higher core inflation in 2011.
With Europe’s sovereign debt crisis continuing, investors are turning to U.S. equities. A net 16 percent of asset allocators are overweight U.S. stocks up from a net 1 percent in November. A net 4 percent are underweight eurozone equities, compared with a net 15 percent overweight in November. Bullishness towards the U.S. dollar is evident with a sharp increase in the number of investors forecasting dollar appreciation. A net 36 percent expect the dollar to make gains in 2011, up from a net 14 percent in November. In the U.S. regional survey, the net percentage of U.S. investors expecting double-digit profit growth has doubled month-on-month to 40 percent.
“Despite rising confidence in global growth, the survey shows that
“The pending new tax deal in the U.S., combined with QE2, has restored confidence in the prospects of U.S. companies, at a time that
Corporates urged to step up investment
Global investors are giving corporates the green light to step up capital expenditure. A net 62 percent of the panel say that companies are broadly under-investing – the highest such reading since the
Investors’ number one preference for use of cash has switched to capital spending with 45 percent of the panel prioritizing it. In November “returning cash to shareholders” was top choice. Investors are also increasingly convinced that companies should borrow more. A net 44 percent of respondents believe corporate balance sheets are under leveraged, compared with a net 41 percent in November.
Technology loses number one sector status after 11 months
Energy has dislodged Technology from its pedestal as the world’s favorite stock sector for the first time in a year. Technology had been the top pick for 11 consecutive months since January. A net 38 percent of asset allocators are overweight Energy, up sharply from a net 24 percent in November. A net 34 percent of the panel is overweight Technology, a monthly fall of one percentage point. A second large gainer was Materials, with an extra 8 percent of respondents moving to overweight positions. Both Energy and Materials are sectors that traditionally benefit from rising inflation.
Banks lost further ground, with a net 28 percent of global investors underweight the sector. European investors were especially fast to move out of Bank stocks. A net 47 percent of European respondents are now underweight Banks, up from a net 22 percent in November.
Europeans remain positive in face of sovereign debt crisis
Aside from their mass movement out of financial stocks, European investors are keeping cool heads. A net 26 percent of European respondents expect the region’s economy to improve in 2011, up from a net 23 percent in November. A net 34 percent are forecasting earnings per share to grow next year, compared with a net 29 percent a month previously.
Cash holdings in the region have ticked upwards, but only modestly, with average cash positions up by 0.1 percent to 3.0 percent of a portfolio month-on-month. “Europeans are looking beyond the noisy process of politics, but believe that a solution to the sovereign debt crisis will be found, and that economic growth and corporate profits will progress in the coming year,” said Patrik Schöwitz, European equities strategist at
Survey of Fund Managers
A total of 209 fund managers, managing a total of
In addition, the group was named No. 1 in the 2010
Source: BofA Merrill Lynch