A recent survey from Bank of America Merrill Lynch on the attitudes of global investors revealed that 72 percent of investors expect the world economy to improve over the next year.
Global investors’ confidence in the world economy is the strongest reading in nearly four years and a substantial increase from 52 percent in July.
Investors, however, remain concerned over economic conditions in China. More than 50 percent of respondents indicated a “hard landing” in China as the biggest threat to economies. Thirty-two percent of investors expect China’s economic growth to be weaker, a decrease from 65 percent last month.
While expectations have fallen for China, sentiment towards the eurozone economic situation has improved. Eighty-eight percent of European fund managers expect the region to strengthen in the next year—twice the reported level last month.
Cash holdings are reduced slightly from July but remain elevated at 4.5 percent, following investors’ expectations that recovery will remain below-trend for the time being.
“While global growth expectations have risen very rapidly, the good news is that cash levels remain high,” Michael Hartnett, the chief investment strategist at BofA Merrill Lynch Global Research, said. “Out-of-favor emerging markets offer some enticing opportunities to deploy these balances.”