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In recent weeks, investors have significantly reduced their exposure to US equities, marking the largest decline on record, as reported by Bank of America Corp.
The allocation of fund managers to US stocks has dropped to approximately 23 percent underweight, the lowest level since June 2023. A net 44 percent of survey participants conducted in March indicated that they anticipate a decline in global economic growth, a sharp increase from the previous month.
Michael Hartnett, a strategist, noted in a report that “pessimism regarding the global growth outlook poses challenges for stocks.”
As US stocks entered a correction earlier this month, global investors are seeking opportunities in other markets. There is a notable demand for Chinese tech stocks, and Europe has also seen gains due to a more favorable regional economic outlook.
Despite this, Hartnett remarked that the rapid shift in investor sentiment aligns with the conclusion of a correction in the US equity market. However, he stated that the S&P 500 would only surpass 6,000 points if there were improvements in trade tensions and inflation issues.
Last week, the strategist advised purchasing the S&P 500 at 5,300 points, which is approximately 7 percent lower than current levels. The index has rebounded after falling to as low as 5,504, driven by investor concerns over the ramifications of President Donald Trump’s trade policies.
This year, European stocks have outperformed their US counterparts, aided by more attractive valuations. According to BofA’s survey, a net 39 percent of global investors are now overweight in European equities, the highest proportion since mid-2021.
The survey took place between March 7th and March 13th, involving 171 participants who collectively manage assets totaling $426 billion.
