Alroy Commentary – Global Market Outlook & Expectation
Global investors remain optimistic in the outlook for economic growth, notably, stable recovery steps for U.S and surprising economic growth for Japan according to the BofA Merrill Lynch Fund Manager Survey for July. Over half of fund managers expect the global economy will be stronger over next year.
Moreover, expectation of dollar revaluation has reached a record high with 83% of respondents. That has brought a ripple effect across several investment sectors, leading positive related sectors to rise (such as US and Japanese stocks) and negative related sectors to fall (commodities and emerging market equities). Due to this expectation, investors desire Japanese equities almost as favorite as U.S. equities. July’s net overweight in Japanese equities among fund managers increase to 27%, and that in US equities is 29%. However, investors’ confident of emerging market have dropped 18% from last month, indeed it hasn’t reached the bottom yet. More investor concern about China’s growth might be weaker, and trend to reduce portfolio weight on China market.
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