Euro-zone managers cut holdings of stocks in most global regions this month, as expectations for profits and economic growth took a beating amid sliding stock markets and growing fears of an economic slowdown, according to the monthly Merrill Lynch survey published yesterday.
A survey of 67 euro-zone specialists, out of a total of 292 fund managers across the world, switched from on balance being overweight of global stocks versus their market benchmarks to a net underweight stance in August.
Some 11 per cent were a net underweight, from eight per cent overweight in July.
The managers' overweight position on European stocks moved from 55 per cent in July to 40 percent in August.
There were few signs of a big shift to bonds out of stocks, however. Managers remained underweight of global bonds, but less negative in August than in July.
A net 11 per cent were underweight in August, from 29 per cent in July.
The survey was carried out between August 1st and 8th.
Managers were more positive about the outlook over the coming 12 months, however. A net 57 per cent expected to raise global equity holding in August, from 39 per cent in July.
Against a backdrop of continuing worries about US corporate accounting, managers remained strongly underweight of US stocks in August, albeit slightly less so than in July, moving to 40 per cent from 45 per cent.
European fund managers became even more underweight of Japanese stocks against their market benchmark.
Some 30 per cent were underweight of Japan equities in August, from 11 per cent in July.
Although managers drew back from most regional stock markets, their average cash balances actually fell in August, suggesting managers have not despaired of stocks completely.
However, low cash balances means there is little spare money to be put to work in the market, says Ms Sarah Franks, European strategy analyst for Merrill Lynch.
Average cash balances as a proportion of total holdings dropped to 4.4 per cent in August from 4.6 per cent in July, although they were up from 3.7 per cent in June.
Only a net 3 per cent of managers expect euro-zone inflation to rise over the next months, from 14.6 per cent who predicted higher prices in July. - (Reuters)
