Mumbai: Investors are dumping emerging market stocks and rushing to safe havens such as the US markets and gold, spooked by growth concerns in Europe, said a fund manager survey by Bank of America-Merrill Lynch.
The bank interviewed 202 fund managers between 7 May and 13 May, at a time when the European Union and the International Monetary Fund cobbled together a near $1 trillion bailout package for Greece.
Emerging markets have been overtaken by the US as the favourite investment destination for the first time since March 2009, the survey showed.
It has “revealed sharp falls in risk appetite and confidence on growth, leading to lower emerging market allocations”, the bank said in an emailed statement on Tuesday.
About 19% of global asset allocators are overweight on developing nations, down from 31% a month ago, the report added.
Average cash levels of such funds rose from 3.5% to 4.3% as the risk appetite indicator suffered the biggest one-month drop since 2003, the survey said. In markets such as India, foreign fund managers have taken out $890.87 million in May and the benchmark Sensex index has shed 3.9% in the month.
Investors expect global liquidity to be the key driver of emerging market stocks, ahead of domestic demand, the survey said. Still, within emerging markets, consumer discretionary spending, a category that relies on internal demand, remains the favourite pick for investors, it said.