Eighty percent of global money managers surveyed by Bank of America Merrill Lynch expect the world economy to grow in 2010, and two-thirds expect equity markets to return to traditional growth levels or better.
Also, 48% of managers said companies are underinvesting, while 51% don't expect interest rate hikes before the fourth quarter of 2010, according to the BofA Merrill Lynch Survey of Fund Managers for December.
“Investors are nervous but optimistic heading into the new year, and respondents are looking for a 7.7% total return from global equity markets,” Michael Hartnett, chief global equity strategist at BofA Merrill Lynch Global Research, said in a news release.
The optimism on the economy comes despite 28% of respondents reporting being underweight bank stocks, compared with 11% in November.
“A year ago, strong pessimism over bank stocks would have spread across the market, but now it appears to be isolated to the banks,” Gary Baker, head of European equity strategy for BofA Merrill Lynch Global Research, said in the news release. “Investors seem to be saying they can be optimistic on markets even without bank support.”
In the area of currency, 37% of global managers said they expect the dollar to strengthen over the next year, and 35% expect the yen to depreciate. Half of respondents said gold is overvalued, up from 40% in November. — Timothy Inklebarger
Mr. Hartnett could not be reached for further comment by press time.