In addition, survey participants appear likely to continue increasing their weightings over the next year, the study finds. When asked which equity region they would like to overweight in the coming 12 months, a net 27% of managers chose the eurozone – the highest reading since May 2007.
Rising bullishness is linked to growing confidence on the region’s economic stability. As recently as May, fund managers viewed the EU sovereign/banking crisis as the biggest “tail risk” to markets. This month they ranked the debt crisis in third place – behind Syria and a China “hard landing”.
Belief in Europe ‘robust’
In line with this about-turn in sentiment, managers are increasingly upbeat that the debt crisis can be resolved through economic expansion, rather than central bank intervention. Half of the panel said stronger economic growth was the “most likely” solution to the crisis in 2013/14, up from just 39% in August, while the proportion advocating ECB stimulus fell from 27% to 19%.
“Belief in Europe’s economy is robust and though eurozone equities have come back strongly, value remains the best on offer in developed world markets,” wrote John Bilton, a European investment strategist at BofA Merrill Lynch Global Research.
The Expert Investor Europe Sentiment Survey similarly indicates that fund manager expectations for European equities have risen sharply this year. As reported, the index hit 41 in August, suggesting a strongly bullish consensus on the region over the next 12 months.
Platinum members can view the latest Expert Investor Europe Manager Sentiment Survey results here.