International fund managers are still upbeat about the prospects for global stock markets, according to a survey compiled by Merrill Lynch. The number of fund managers who expect world stock markets to be higher in a year's time rose from 73 per cent in July to 74 per cent in August.

A most interesting finding was that 25 per cent of those questioned thought investors would enjoy double-digit equity returns over the coming year.

The fund managers are still in love with US equities, with 45 per cent of the panel examined planning to maintain a substantial amount of investments in the US market over the next 12 months. Some 60 per cent believe the prospects for corporate profits are most favourable in the US. They still view the US market as the most expensive stock market relative to the value that is available in other markets.

Expectations of a recovery remain widespread with 63 per cent of fund managers now favouring economically sensitive stocks over defensive ones. There has also been a subtle shift away from utilities and pharmaceuticals towards technology and telecoms.