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Alternative Market Briefing

Investors retreat to cash positions as China worry grows

Thursday, January 21, 2016

Bailey McCann, Opalesque New York:

Investors are moving of equities and into cash on growing concerns over China's growth, according to the latest BofA Merrill Lynch Fund Manager Survey. 8 percent of fund managers see the global economy strengthening over the next 12 months - the survey’s lowest reading on this measure since 2012.

Despite this, just 12 percent believe a global recession will occur in the next 12 months.

For the first time in three years, respondents now think that global profits will decline over the next 12 months.

All of this is set against the backdrop of the recent interest rate hike from the Federal Reserve. Respondents are limiting their view of how many more rate hikes the market can expect in light of the declining global economic picture. Over half of those surveyed now expect no more than two rate hikes over the next 12 months.

Average cash balances are up to 5.4 percent, the third-highest reading since 2009. A net 38 percent of investors are now overweight cash.

"Investors are not yet 'max bearish’. They have yet to accept that we are already well into a normal, cyclical recession/bear market," said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research in a statement on the survey.

An overall total of 211 panelists with US$610 billion of assets under management participated in the survey from 8 January to 14 January 2016. The survey was conducted by BofA Merrill Lynch Global Research with......................

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