Expectations for global growth and corporate earnings have plunged to a record low, according to a monthly survey by BofA fund managers, as cash levels hit their highest level in more than two decades as investors reduce their exposure to risky assets .
Conducted July 8-15 among nearly 300 investors overseeing $800 billion in assets under management, the survey revealed a “level of investor pessimism” reaching beyond the depths of the COVID-19 pandemic and crisis. world financial year of 2008.
Investors raised their level of cash to more than 6%, the highest since October 2001, while equity allocations fell to levels not seen during the collapse of Lehman Brothers in 2008.
Fears of a recession have risen to levels last seen in May 2020, while investor sentiment remains at a “bearish” high, the U.S. investment bank said.
While three-quarters of fund managers surveyed expect inflation to decline over the next 12 months, the backdrop remains “stagflationary” with high inflation and slowing growth supporting sentiment.
Long US Dollars were the most traded in July, followed by Long Oil/Commodities and Long ESG Assets. The prospect of persistently high inflation was the main tail risk for global markets, followed by a global recession. The Russian-Ukrainian conflict has fallen to No. 5.
Half of investors surveyed want companies to strengthen their balance sheets, while less than a third would like to see more capital spending.
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