Although global growth, profits and liquidity expectations are at their lowest levels since summer 2012, fund managers remain bullish on European stocks.
A survey conducted by Bank of America Merrill Lynch showed that 50% of European fund managers expect stronger growth in the region and 50% of global investors would over-weight European stocks on a 12 month view.
In terms of preferred sectors, the fund manager survey found that consumer over commodity plays is the theme most reflected in consensus positioning while financial sub sectors are underweight. Banks and insurance companies are considered undervalued.
Investor sentiment has improved towards Switzerland but UK stocks are the less favoured with a net underweight of 29%. Italy remains the most favoured, maintaining its leading position since the last survey conducted in December, with 29% of European fund managers overweight in the country.
The survey also found that just 8% of fund managers see the global economy strengthening over the next 12 months, the lowest reading since 2012. However, only 12% think there will be a global recession in the following year.
An overall total of 211 panelists with $610 billion (€558 billion) of assets under management participated in the survey. A total of 173 managers, managing $499 billion, participated in the global survey. A total of 96 managers, managing $228 billion, participated in the regional surveys.
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