LONDON (Reuters) – Buyers turned extra bullish on overwhelmed down pockets of fairness sectors and commodities, gearing up for the “reopening trade” as COVID-19 vaccines have been being rolled out, (BofA)’s month-to-month investor survey confirmed on Tuesday.
The euphoria despatched traders’ cash holdings right down to 4% in December – to pre-COVID-19 ranges – in response to the survey of 217 fund managers with $576 billion in property beneath administration.
The drop triggered a contrarian “sell signal”, (BofA) added. International stock valuations are nearing the highs seen in the course of the dotcom bubble, with the MSCI World index buying and selling near 20 instances ahead earnings.
A whopping 60% of the traders surveyed by (BofA) stated they anticipated rising markets to outperform in 2021 by a giant margin amid a falling greenback, vaccine rollouts and rising expectations of a V-shaped financial restoration. Allocation to rising market stocks hit the best since November 2010.
“2020 was a yr completely dominated by COVID-19 which precipitated the quickest financial and monetary market collapse of all time. Nevertheless, simply half a yr later, restoration expectations have additionally surpassed prior recessions in each pace and magnitude,” (BofA) wrote in a notice.
COVID-19 was nonetheless seen as a menace with 30% of the traders within the survey citing it as a prime tail threat, although decrease than the 41% seen in November. Fears of inflation featured because the second prime tail threat.
Lengthy U.S. tech remained the “most crowded trade” for the eighth straight month. Brief greenback and lengthy bitcoin got here second and third.
Bitcoin has gained 170% this yr as hedge funds, household workplaces and even old-school insurers stormed into the cryptocurrency this yr. Some Wall Street banks additionally started speaking up its position in portfolios.
Reporting by Thyagaraju Adinarayan; Enhancing by Karin Strohecker and Alex Richardson