Summary
- Global fund managers reported that they reduced their US stock allocation by about 40%p in March, recording the largest decrease ever.
- According to the survey, fund managers emphasized the appeal of European stocks and increased their allocation to these stocks.
- According to BofA strategists, the S&P500 can only exceed 6,000 points if concerns about trade war and inflation ease.
US Stock Allocation Reduced to 23%, Replaced with European Stocks
"S&P500 Can Reach 6,000p Only If Trade War Concerns and Inflation Ease
Global fund managers reduced their exposure to US assets by about 40%p in March, recording the largest monthly decrease ever in just one month.
According to Bloomberg and other foreign media on the 18th (local time), Bank of America's (BofA) monthly fund manager survey showed that global fund managers' allocation to US stocks fell to an underweight position of about 23%. This represents a decrease of about 40%p from the previous month, marking the lowest level since June 2023.
Fund managers responded that they have drastically reduced their US stock allocations in recent weeks. Among the respondents who participated in this survey, 44% expected global economic growth to worsen. Pessimistic outlook on global economic growth increased dramatically compared to a month ago.
Global managers are looking for opportunities elsewhere after US stocks entered a correction earlier this month. Chinese technology stocks are in high demand, and Europe is also seeing increased investment demand as the regional economic outlook brightens.
Michael Hartnett, a strategist at BofA Securities, added that due to the sharp deterioration in investment sentiment, the S&P500 could only rise above 6,000 points if concerns about trade wars and inflation ease.
Last week, the strategist recommended buying when the S&P 500 falls to 5,300 points. This is about 7% lower than the current level. Recently, the S&P500 fell to 5,504 points due to concerns about trade wars before rebounding slightly.
European stocks are outperforming the US this year, based on cheaper valuations. According to the BofA survey, 39% of global managers have significantly increased their weighting in European stocks. This is the highest since mid-2021.
The survey was conducted from March 7 to 13 and surveyed 171 people with assets under management of $426 billion.
Kim Jung-a, Contributing Writer kja@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
