'Global investor sentiment turns bearish in Jul over growth uncertainty'

Global investor sentiment turned bearish this month as growth and profit expectations plunged amid trade war fears that emerged as the biggest risk, says a survey.

According to BofA Merrill Lynch July Fund Manager Survey, 60 per cent of respondents cited trade war as the biggest tail risk.

Meanwhile, growth and profit expectations plunged significantly as just 11 per cent of respondents said they expect faster global growth in the next 12 months, down 12 percentage point from last month and the lowest level since February 11, 2016, the survey said.

"Investor sentiment is bearish this month, with survey respondents eyeing the risks from a possible trade war," said Michael Hartnett, chief investment strategist.

When asked their expectations for global profits, net 9 per cent of respondents indicated that they do not expect an improvement in the next 12 months, down 53 percentage point from the beginning of the year and the lowest level since February 2016.

Net 11 per cent of those surveyed do not think corporate earnings will improve by 10 per cent or more over the next year, a significant downward swing from net 35 per cent thinking they would in February 2018.

Hartnett further noted that "equity allocation has fallen notably while growth and profit expectations have slumped".

This month's survey found notable shifts in regional equity allocations. While allocation to US equities and UK equities jumped, there was a significant drop in Eurozone equities allocation and emerging market equities.

The survey was conducted between July 6-12 and 231 panellists with USD 663 billion assets under management (AUM) participated in total.