Recession fears rise among fund managers - BofA Merrill Lynch survey
By Abigail Townsend
Date: Tuesday 17 Sep 2019
(Sharecast News) - Fund managers increasingly believe the global economy could slide into recession within 12 months, according to a leading industry survey.
The Bank of America Merrill Lynch September Fund Manager Survey found that recession concerns "continue to temper investor risk appetite", with 38% of respondents expecting a recession over the next 12 months and 59% seeing one as unlikely - the highest net recession risk since August 2009.
In the August survey, 34% of respondents expected a recession over the next 12 months. A recession is defined as two quarters of negative real GDP growth.
Just 21% of respondents now expect short-term rates to rise over the next 12 months, compared to a year ago when 87% were predicting higher short-term rates.
The main risk to the global economy cited was the US-China trade war, with 38% of fund managers calling it the "new normal" and only 30% believing it will be resolved before the 2020 US presidential election.
BofAML noted: "We remain contrarian bullish, as our September Fund Manager Survey shows only modest improvement in risk appetite. Cash levels dropped to 4.7% from 5.1% in August and 5.7% in June.
"[The] Bull & Bear Indicator remains extremely bearish at 0.7; FMS investors say fiscal stimulus [is] essential to boost allocation to stocks, EPS expectations, and turbo charge nascent rotation from growth to value."
FMS investors remained overweight in assets that do well during periods of slow growth and low interest rates, "with no signs yet of a rotation into value assets", the bank added.
BofAML surveyed 235 participants with a total $683bn of assets under management between them between 6 and 12 September.
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