Bank of America-Merrill Lynch Global Research May Fund Manager Survey rules out a V-shaped recovery for world stock markets. According to the survey, just 10 per cent expect a V-shaped recovery and 25 per cent, a new bull market; in contrast, 75 per cent expect a U or W-shaped recovery and 68 per cent, a bear market rally.

The survey leaves BofA’s Bull & Bear Indicator pinned at zero, that is, investors still remain extremely bearish, it said. Further, according to the survey, the biggest tail risk for investors is Covid-19 second wave (52 per cent). Net 23 per cent of FMS investors believe ‘value’ will underperform ‘growth’. According to BofA-ML, last time this many FMS investors expected value to underperform growth was in December 2007. The survey points global growth expectations jumped by 40 percentage point to net 38 per cent (65 per cent point stronger while below 28 per cent represent weaker). The FMS investors expect global growth to strengthen over the next 12 months, but investors do not expect global manufacturing PMI to rise back above 50 before November. In a post Covid-19 world, FMS investors say the biggest structural shifts will be supply chain reshoring (68 per cent), protectionism (44 per cent) and higher taxation (42 per cent).

Net 73 per cent of FMS investors want corporates to spend cash on improving their balance sheets, slightly down from last month but still above March 2009 levels.

The survey was conducted between May 7 and 14 and 223 panelists with $651 billion AUM participated.

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