China troubles lead to historic reduction in EM appetite – BofA

FXStreet (Bali) – Global investors reduced their exposure to emerging markets to record low levels, while expectations are firming up for an interest rate hike by the Fed in September, a survey conducted by Bank of America Merrill Lynch showed.

According to the gloomy survey – based on 202 fund managers polled -, concerns about China and a potential emerging markets debt spiral crisis are now topping investors’ list of global concerns, surpassing fears of a Eurozone break-up.

Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, notes: “Investors are sending a clear message that they are positioned for lower growth in China and emerging markets.”

Despite the prospects for low growth, only 6 percent of fund managers expected another world-wide economic slowdown in the years to come. European equities remained an attractive investment, while commodities were perceived bearish.

In terms of currencies, the Yen was see as the most ‘undervalued’ by a net 13 percent, while the British Pound was the most ‘overvalued’. As per the US Dollar, 45 percent thought was significantly ‘overvalued’.

Global investors reduced their exposure to emerging markets to record low levels, while expectations are firming up for an interest rate hike by the Fed in September, a survey conducted by Bank of America Merrill Lynch showed.

(Market News Provided by FXstreet)