A monthly survey by investment bank BoFA Securities has shown that optimism among fund managers over global economic growth has fallen to historic lows. The contraction comes amid concerns about possible stagflation, which is at its highest since August 2008.
According to the report, released on Tuesday, a net 71% of those polled were pessimistic about global growth prospects in the coming months. That is the most since the survey records began in the early 1990s.
The European edition of BoFA survey found that some 81% of respondents expected the region’s economy to weaken over the coming year compared with 69% in March.
The research showed that fund manager holdings of cash – traditionally an indicator of investor caution – eased to 5.5% in April from 5.9% in the previous month. However, prospects of a global recession remain the top “tail risk” for global markets.
Allocations to commodities surged to a record 38%, with investments in oil and commodities becoming the most “crowded trade.” Other “long” positions were in resources stocks and healthcare, while “short” bets were evident in bonds and cyclical stocks whose performance is most closely linked to economic growth, BoFA said.
The survey also showed that global profit expectations have deteriorated to their weakest levels since March 2020.
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