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Business News/ News / World/  Concerns about US elections are rising sharply among global fund managers: BofA
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Concerns about US elections are rising sharply among global fund managers: BofA

In October, the US election jumped a spot higher on the list of tail risks for the market
  • Covid-19 remains the top tail risks for the markets. The percentage of participants citing covid as the biggest risk increased from 30% in September to 34% in October
  • Of the total 224 panelists in the BofA Securities survey, 61% see contested outcome of the US elections causing maximum market volatility in the fourth quarterPremium
    Of the total 224 panelists in the BofA Securities survey, 61% see contested outcome of the US elections causing maximum market volatility in the fourth quarter

    Global fund managers see US elections as the second biggest risk for the markets, showed the latest Bank of America (BofA) Securities survey. In October, the US election jumped a spot higher on the list of tail risks for the market. According to the survey, about 23% of those surveyed are worried about the US elections. This is higher than the 18% in September.

    Of the total 224 panelists, 61% see contested outcome of the US elections causing maximum market volatility in the fourth quarter. Contested election is a scenario in which the validity of the result is challenged by the losing candidate.

    "We increase our equity allocation following a meaningful improvement in fundamentals. However, heightened uncertainty ahead of the US election limits our upgrade to neutral. As such, a lot rests on the result of the US election and the outlook for additional fiscal stimulus. A decisive Democrat victory would be positive for the economy, but a divided Congress or a contested result could prolong the policy paralysis," analysts at Oxford Economics said in a report on 13 October.

    Covid-19 remains the top tail risks for the markets. The percentage of participants citing covid as the biggest risk increased from 30% in September to 34% in October.

    "Greater social mobility still generates a surge in infections. The scientific community has made great strides, but permanent layoffs are growing and the global economy has not achieved a self-reinforcing expansion. Despite massive monetary support, equity markets will struggle to move higher in the absence of a medical breakthrough," Bob Doll, senior portfolio strategist, Nuveen Asset Management, said in a note earlier this week.

    Meanwhile, concerns around a technology bubble have receded, falling from 22% to 16% in October. However, Brexit is a new tail risk event that some global fund manager are cautious about.

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    Published: 15 Oct 2020, 10:27 AM IST
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