Global fund managers have become less bullish on stocks due to growing inflation concerns in both emerging markets and advanced economies.
Around four in ten asset managers polled in HSBC’s latest Fund Managers’ Survey continued to hold an overweight view towards equities in the second quarter of 2011, while another 44 per cent shifted their views to neutral.
All fund managers were overweight on shares in the first three months of the year.
The survey said that 13 per cent of respondents turned bullish on bonds and cash in the second quarter, after not favouring either of those asset classes in the last quarter.
“While fund managers plan to diversify exposure into bonds and cash, 44 per cent remain bullish towards equities, reflecting the potential of this asset class to continue to offer relatively attractive valuations,” HSBC Bank Australia head of global investments Geoffrey Pidgeon said.
“In recent months, however, inflation remains a concern over fast growing economies and an emerging concern in developed markets such as Europe, which has fuelled short-term volatility in the equities market, affecting investor sentiment.”
Specifically within equities, over half of fund managers were bullish on Japanese stocks and emerging markets equities in the second quarter, compared to 38 per cent and 75 per cent, respectively, in the first quarter.
“Emerging markets equities are expected to continue to offer potential growth as corporate earnings are expected to rise and longer term valuations remain attractive with sustained overall economic growth,” Pidgeon said.
“While inflation is weighing down confidence in asset classes invested in Asia-Pacific, investors are poised to capture opportunities from the rebuilding in Japan.”
The 13 participating fund managers in the survey are: AllianceBernstein, Allianz, Baring Asset Management, BlackRock, Fidelity, Franklin Templeton, HSBC Global Asset Management, Invesco, Investec, JP Morgan Asset Management, Prudential, Schroders and Société Générale.
