UK Edition
Record share of fund managers say global stocks 'overvalued'
A record share of fund managers believe global equities are overvalued, according to a survey by Bank of America Merrill Lynch.
The investment bank warned that risk appetite had “moderated” over the past month, as it released the results of its latest poll in the wake of a big plunge in technology stocks.
Its survey of 210 asset managers with $596bn (£468bn) under management showed that a net 44pc of respondents believe global equities are overvalued, the highest share since the survey began in 1998.
US equities were judged “by far” the most overvalued globally, with a net 84pc saying they are overvalued. Three quarters of respondents said US and global internet stocks were either “expensive” or “bubble like”.
The tech-heavy Nasdaq share index was seen as the “most crowded trade”, followed by eurozone equities, which have enjoyed a lift after Emmanuel Macron’s victory.
BAML’s survey was conducted just a few days before a two-day rout in US tech stocks gripped markets amid fears that the sector is in a “bubble”. A bearish Goldman Sachs note on the sector helped to drive the falls. BAML said the sell-off was “consistent with the results of our surveys”.
Its US strategy team’s positioning data showed most money managers were overweight in the so-called “FANG stocks” of Facebook, Amazon, Netflix, and Google, which trades as Alphabet.
The survey also showed investors believed the European Central Bank was unlikely to tighten monetary policy this year.
“Expectations around ECB policy continue to gravitate towards interest rate increases in the coming 12 to 18 months,” BAML said, with 63pc expecting a deposit rate increase in 2018.
BAML also said the UK remained the least popular market for European investors, while sentiment in Italy fell “noticeably” in contrast to other eurozone countries where optimism rose.
France is now the most popular equity market in Europe, according to BAML, followed closely by Germany.