Emerging market investors turned more bearish on Indian shares in May compared with a month ago, according to the Bank of America Merrill Lynch (BofA ML) survey of fund Managers.
Emerging market fund managers increased their underweight on India to over 55% in May from around 20% in April, as per the findings of BofA ML survey.
The survey took place from May 4 to May 10, after elections in France and Greece. A total of 125 managers, managing $270 billion, participated in BofA ML's emerging market and Asia fund manager survey.
"Global liquidity may be abundant, but fund managers are taking lower-than-normal risk in their portfolios in response to softer global economic data and elevated threats from Europe," said Kate Moore, senior global equity strategist at BofA ML in a report."Emerging market-dedicated investors appear to be more cautious. They trimmed their sector and country allocations across the board in May."
The Bombay Stock Exchange (BSE) benchmark, the Sensex, has lost 6.37% in this month so far. The 30-stock index ended 4.48 points lower at 16,217.82.
Foreign Institutional Investors (FIIs), which pumped in Rs 43,383 crore in Indian shares in this year till April, have withdrawn Rs 927 crore in this month till May 23, Securities and Exchange Board of India (Sebi) data compiled by BS Research Bureau showed.
Emerging market investors scaled back their overweight on Chinese equities to 29% in May, lowest overweight since October 11. They turned 14% underweight on Brazil, first time since February 2011.
A growing majority of global investors would like to see more stimulative fiscal policies from governments around the world, amid resurgent fears about the Greek economy, according to the survey.
“Investors have eradicated hopes of growth and inflation that had built up in the early months of the year – and they are looking to policy makers for stimulus,” said Gary Baker, head of European equities strategy at BofA ML Global Research.
The proportion of global investors saying global fiscal policy is “too restrictive” more than doubled to a net 23% from a net 11% in April, BofA ML said. A total of 173 managers, managing $526 billion, participated in the global survey.
Nearly two-thirds of investors are concerned that Greece would be the source of a negative surprise this year, up sharply from 48% in April, BofA ML survey showed.
Appetite for commodities fell back to its lowest level in seven months, the survey found. A net 2% of the panel is now underweight commodities compared with a net 8% overweight the asset class in April.
