This worrying signal for the markets, which has not been seen since the financial crisis of 2008-2009

(BFM Bourse) – According to a survey carried out by Bank of America, fund managers are much more in favor of bonds than stocks next year. So much so that their weighting in stocks relative to bonds has reached its lowest level since April 2009.

The pessimism seems to be in place for the year 2023. According to a survey

published Tuesday by Bank of America and conducted monthly with many fund managers, the economic outlook is likely to worsen.

In this December edition, nearly 70% (69%) of executives expect the global economy to weaken over the next 12 months, a number that is certainly down from November’s 74%, but still close to a peak.

Popular bonds

This pessimism is reflected in the sense of risk aversion expressed by managers. The respondents therefore have a positive attitude towards bonds.

Thus, the net percentage of investors who say they overweight this asset class in their portfolio is positive at 10%, a first since the crisis of 2008-2009. This marks a trend reversal. In November, the balance was still negative at -19%, meaning investors were underweighting this asset class.

Source: Bank of America Global Research

In relative positioning, i.e. in the allocation of shares in relation to bonds in the managers’ portfolio, the rate is negative and has reached its lowest level since April 2009, notes the bank. This means that the managers have never been so underweight stocks in relation to bonds since April 2009. However, the number has been negative for some months (it had also been so in May 2020 alone). ).

Source: Bank of America Global Research

Logically, when managers are asked which asset class should achieve the best results in 2023, government bonds come out on top (27%), ahead of equities (25%), corporate bonds (24%) and commodities (12%).

Moreover, 68% of them consider a recession likely in the next 12 months, slightly less than in November (77%). An increase the bank attributed to the improvement in the business outlook for China.

Three-quarters of respondents see a more robust Chinese economy in 2023 than in 2022, compared with just 13% in November. In recent weeks, China has dealt major blows to its zero-Covid policy by greatly easing health restrictions. This fueled market optimism at the end of the year.

Inflation as the biggest risk

Almost all, that is 90% of them, believe that inflation will now moderate over the next 12 months. But when asked about the biggest risk to markets, inflation, which is still too high, comes first (37%) ahead of a deep recession (20%), restrictive central banks (16%) and worsening geopolitics (12%) ).

Source: Bank of America Global Research

Also note that many managers believe that gold is undervalued. The difference between those who believe the metal is too expensive and those who believe the opposite is -21%, an absolute record. Conversely, the percentage is positive for the dollar with 69%, which means that a very large part of them consider the dollar to be overvalued. For the euro, the difference is -32%.

Bank of America surveyed a total of 319 funds with assets under management totaling $815 billion. 281 participants representing a total of $728 billion in assets answered questions from around the world, while 178 participants representing $344 billion in assets under management answered questions about specific regions.Julien Marion – ©2022 BFM Bourse

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