India continues to be featured among the ‘least favoured’ investment destinations, according to the Bank of America-Merrill Lynch (BofA ML) fund manager survey. Fund managers have reduced their allocations towards emerging markets, including India, for the fourth successive month to reach the lowest level in two years.
“March FMS (fund manager survey) reveals a drop in risk appetite after February’s record bullish survey, but emerging market positions are cut further. The average cash balance rises to 4.1 per cent, back to a neutral reading and up from the 3.5 per cent level which triggered a tactical sell on global equities last month,” the report said. Overall, investors are neutral on emerging markets equities. Two months earlier a net 43 per cent were overweight.
The survey further reveals, Russia (67 per cent) and Turkey (29 per cent) are still the favoured markets though positions have been trimmed this month. While allocations to China (net 43 per cent overweight) have risen to the highest level since June 2009, while Malaysia (-43 per cent), Taiwan (-33 per cent) and India (-29 per cent) remain least favoured, though bets have been scaled back.
Asia Pacific investors have increased allocations to China (+31 per cent) and Hong Kong (+19 per cent). “Least favoured markets remain India (-10 per cent) and Malaysia (-10 per cent). Singapore (-10 per cent) and Korea (-3 per cent) have been cut to underweight,” it said.
While India is still featuring among the least favoured markets, it may seek solace in the fact that the percentage of fund managers negative on India has gone down as compared to last month. In February, 20 per cent of the fund managers surveyed took a negative stand on India.
Meanwhile, a net 31 per cent of fund managers still believe the global economy will strengthen next year, but this is down from a net 51 per cent last month. Following the recent oil price surge, investors fear for corporate profitability and global growth, according to the survey.
A net 18 per cent are overweight cash, compared to a net 3 per cent underweight in February, it says. Globally, their average cash balance rose to 4.1 per cent of portfolios in March, compared to 3.5 per cent a month ago, it added.
A total of 203 fund managers, managing a total of $602 billion, participated in the global survey from March 4-10. A total of 168 managers, managing $395 billion, participated in the regional surveys.
The survey was conducted by BofA-Merrill Lynch Research with the help of market research company TNS.
