Asia-Pacific turns overweight on India

Investors in the Asia-Pacific region, excluding Japan, turned overweight on Indian stocks in June from underweight in May, according to a Bank of America (BofA) Merrill Lynch survey of fund managers.

However, emerging market investors were still underweight on Indian equities, the survey for emerging markets indicated. Global investors ranked Turkey and Russia the most-preferred emerging markets, while investors in the Asia-Pacific were most overweight on Indonesia and China.

Overall, 31 per cent global investors were overweight on emerging markets in June, up from 19 per cent last month.

“While global emerging market equities historically do best in an environment of rising growth and risk appetite, the June fund manager survey showed global investors re-established emerging markets as their most favoured region,” BofA Merrill Lynch Chief Global Equity Strategist Michael Hartnett said in a strategy note.

According to a separate BofA Merrill Lynch survey for global markets, investors’ belief in global economic growth and the ability of companies to improve profits have significantly eroded. The survey showed only 24 per cent respondents believed the world economy would strengthen in the next 12 months, down from 42 per cent in May and 61 per cent in April.

Global investors expressed similar concerns over corporate profits. Only 28 per cent believed profits would improve this year, as compared to 47 per cent in May and 67 per cent two months ago. The proportion of respondents expecting corporate operating margins to improve halved in the past two months to 19 per cent.