Amid market carnage, fund manager allocations to EM equities remain firm
The chart, taken from global fund manager surveys by Bank of America Merrill Lynch, shows that the stock market fall has led to fund managers moving away from equities into cash. The silver lining is that there has been no change in the high percentage of fund managers who are overweight emerging market equities. This could be due to stronger growth in emerging markets—the survey says the earnings outlook is brighter in emerging markets. The prospect of higher global growth should also be positive for export-oriented emerging markets.
For Indian markets, however, valuations remain high, while the impact on growth of the Reserve Bank of India’s latest move on impaired assets needs to be factored in.