Emerging market fund managers confirmed bearish sentiment on equities and are risk-averse, says the October Fund Manager Survey released by Bank of America-Merrill Lynch.

“Cash levels remained elevated at five per cent and investors further trimmed their equity and commodity allocations this month. Global growth expectations remained weak, while the outlook for Chinese growth fell to the lowest level since January 2009,” said the report.

Even though the investors continued to remain overweight on emerging markets' equities, they have reduced their allocations to this segment. The report said that there would be selling pressure if macro and growth risks increase.

Banking was the most ‘detested' sector among investors in both the global and Emerging Market (EM) surveys, according to the report. A net 50 per cent of the fund mangers said that they were underweight on the sector, the largest underweight for this sector in the history of the EM Fund Manager Survey, said the report.

Preference

The most preferred among the EM investors was the consumer discretionary sector, while for the Asia Pacific investors, the most preferred were the retail sector, auto and FMCG. The pharmaceuticals/ health sector was brought down from overweight to underweight by the Asia Pacific investors. The Asia Pacific investors significantly increased their underweight positions for the utilities and industrials sectors.

Among the emerging market investors, Russia continues to remain the most popular. Overweight countries included China, Indonesia and Thailand, while underweight countries include Brazil, Thailand and Taiwan.

For the Asia Pacific investors, China and Malaysia were among the most favoured countries, while Australia was the least preferred. South Korea was significantly underweight while Indonesia and Singapore went from being overweight to underweight among the investors.

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