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Alternative Market Briefing

Investors less confident in global economy as end of quantitative easing nears

Wednesday, October 15, 2014

Komfie Manalo, Opalesque Asia:

The imminent end of quantitative easing in the U.S. have left investors much less confident in their outlook for the global economy and corporate profitability, according to the BofA Merrill Lynch Fund Manager Survey for October.

In a press statement, BofA Merrill said that after a sharp fall of more than 20 percentage points from September, only a net 32% of respondents expect the global economy to strengthen over the next 12 months. This is the lowest reading in two years. Inflation and earnings expectations have slumped: recent consensus over the world experiencing both below-trend inflation and below-trend growth is even stronger this month at 77%.

"Cash balances are high, but investors are retreating to benchmark positions rather than staging an exodus from markets," said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research. "With the European Central Bank 'hope trade’ gone, performance in European equities is reverting to fundamentals. As our view remains downbeat, we continue to favor defensive dividend yield stocks and expect any rallies in cyclical stocks to be short-lived," added Manish Kabra, European equity and quantitative strategist.

The study added that monetary policy underlies this shift in sentiment. Only a net 18 percent of......................

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