Strong macro headwinds and uncertainty on global growth kept investors bearish in November, shows a Bank of America-Merrill Lynch survey. Despite broad risk aversion, investors became more constructive on emerging market (EM) due to the relative growth potential, policy options and equity underperformance. Sentiment improved on China.
EM investors reported a preference for consumer-oriented stocks. While EM investors trimmed their exposure to consumer discretionary, the sector was once again the favoured one. Global and EM investors raised their exposure in energy. Utilities and financials were the least favoured sectors. Stronger confidence in China’s ability to avoid a “hard” landing was echoed by EM investors, who raised their allocations to China to the highest level since May 2009.
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Asia-Pacific investors remain overweight on staples, retail and auto. Underweight positions in insurance, industrials and materials have been pared back. Banks and utilities remain underweight. Asia-Pacific investors were confident on China. Indonesia is their next favourite.
Edited excerpts from a report by Bank of America-Merrill Lynch. Comment at email@example.com
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