It’s ‘no longer a recession’, according to the Bank of America (BofA) September Global Fund Manager Survey, with more investors (49 percent) saying the macro situation is in an early-cycle phase than in recession (37 percent). This is the first time this has happened since February when global lockdowns due to the Covid-19 pandemic were barely on the horizon.
Fifty-eight percent of BofA survey respondents now say a new bull market has begun, up from 25 percent in May, with a net 84 percent predicting global growth in the next 12 months.
This translates into a growing demand for companies to increase capex, something 37 percent of investors now want to see, compared with just 13 percent in April. But with a ‘tech bubble’ cited as the number two tail risk among survey respondents after a second wave of Covid-19 (and the US election in third place), balance-sheet discipline remains key for just over half of investors (51 percent).
The bank also asked its respondents when they thought a credible vaccine would be available: most (39 percent) predict Q1 2021, while 32 percent say Q4 2020.
With the survey respondents calling long US tech the most ‘crowded trade’ of all-time (80 percent), the September study shows a ‘rotation’ toward more cyclical stocks, notes BofA: a decrease in allocation to tech, healthcare and large caps and an increase to industrials – to the highest overweight level since January 2018 – small caps and value stocks.
There is no evidence of regional rotation, however, with a preference for US equities over Europe, the UK and emerging markets. In fact, a net 35 percent of investors are underweight UK equities, the lowest level since March 2018.
The survey is based on responses from a panel of 224 investors representing around $646 bn.
