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Alternative Market Briefing

BofA Merrill Lynch survey finds sharp rise in investor confidence

Wednesday, August 15, 2012

Beverly Chandler, Opalesque London: A global survey of fund managers from BofA Merrill Lynch has found that 15% of the 173 panellists surveyed believe that the world economy will get stronger in the coming 12 months, reflecting a sharp rise in investor sentiment from the lows of July. The figure represents a monthly swing of 28 percentage points, the largest leap in confidence since April to May 2009, when the world emerged from the credit crunch. In July, a net 13% said the economy would weaken. BofA Merrill Lynch’s Growth Expectations Composite has risen to 49 from 37 in July.

Beyond that, BofA Merrill Lynch has found that fears about the outlook for corporate profits have reduced since July. A net 21% of the panel expects profits to deteriorate in the coming year, down from a net 38% a month ago.

The bank believes that the fresh optimism comes amid growing expectations of intervention by the European Central Bank (ECB). "The proportion of the panel ruling out more quantitative easing by the ECB has halved to 9%, while 38% expect the ECB to act during the third quarter (up from 29% in July). China’s economy is also providing optimism with a net 14% of the regional panel saying China’s economy will improve – the most positive reading since November 2010.

"August’s surge in confidence seems to be more a triumph of policy projection and potential than positive economic data. As indicated by the survey, the risk is now that inaction by policy makers would lead to a ......................

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