Fund managers' confidence in global stock markets has increased significantly in recent times on the back of positive economic sentiment, according to a survey.
According to the Bank of America-Merrill Lynch fund manager survey for January, appetite for global equities is at its highest level since July 2007.
"A net 55 per cent of asset allocators say that they are 'overweight' global equities. It represents a significant increase from December when a net 40 per cent was overweight the asset class," the report said.
Overweight refers to a recommendation for investors to increase their investment position in a particular market.
"The combination of growth optimism and a benign view towards higher inflation provide a potent case for equity investment," BofA Merrill Lynch Global Research Head (European Equities strategy) Gary Baker said.
The survey suggested that confidence in the global economy and corporate profit is growing. A net 55 per cent of respondents expected the global economy to strengthen this year with 39 per cent predicting 'above trend' growth in the coming 12 months.
Rising inflation is not a major concern this month -- even though 72 per cent of fund managers are of the view that it would continue to rise this year -- because they are confident about the working of monetary policy.
"Investors believe monetary easing as working; in the absence of either tighter policy or weaker data, equity enthusiasm looks contagious," said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research.
The survey found that global emerging market support remained high but has continued to decline. A net 43 per cent fund managers were overweight on global emerging market equities, down from a net 56 per cent two months ago.
Meanwhile, the survey pointed out that sentiments for the US and Japanese market have also improved.
A total of 199 fund managers, managing a total of USD 562 billion, participated in the global survey for January.
