US bucks bearish trend
Fund managers globally have adopted an increasingly cautious view on Pacific Basin equities, apart from in the United States, where investment managers appear to have become increasingly aggressive buyers.
According to the monthly Merrill Lynch Gallup Global Survey, US fund managers, responsible for funds totalling US$1.68 trillion, who wanted to buy Pacific Basin equities, outnumbered sellers by a huge 37 per cent, against 18 per cent in December.
The report said that their correspondingly bearish view on the 12-month outlook for the US equity market, where bears were now outnumbering bulls by 7 per cent, and sellers of US equities outnumbering buyers by 20 per cent, had compelled managers to look at other regions.
On a three-month forecast, 48 per cent of US fund managers were bullish on Pacific Basin equities, compared with 37 per cent in December, with 54 per cent bullish over a 12-month period.
In contrast Japanese fund managers, who command more assets under management than any other country, have turned increasingly bearish on the region.
Buyers outnumbered sellers by only 10 per cent in January, compared with 21 per cent in December, while on a three-month forecast, the balance of bulls minus bears had been radically scaled down hitting only 15 per cent, compared with 37 per cent in December.
Pacific Basin equities now make up only 2 per cent of global Japanese funds.
The Japanese fund managers surveyed, who were responsible for $688 billion, were similarly pessimistic on Japanese equities, although the negative outlook now long-held for the Japanese economy seemed to be bottoming out.
European managers recorded flat sentiment, with the number of buyers beating sellers of Pacific Basin equities reaching 13 per cent in January, against 14 per cent in December.
Representing about $722 billion of funds, the survey found that over three months, only 21 per cent of managers were bullish on the region, against 29 per cent last month, and over 12 months 34 per cent had a positive forecast, compared with 43 per cent.
They are now expecting stronger European economies this year and are bearish on the outlook for German bonds. 'Bears outnumber bulls by a balance of 59 per cent', the survey said.
British managers, responsible for $1.9 trillion, have also taken a largely flat view of the region's equity markets, with 10 per cent net buyers, against 12 per cent last month.