Emerging market equity sentiment is at its highest since November 2013 now, but is still way behind the reading for both US and European equities. Some 44% of the fund managers who took part in the survey expect emerging equity markets to return more than 5% over the next twelve months, while 22% expect losses of more than 5%.
Trust in Europe unaffected
Though that proves sentiment is overall clearly on the positive side, fund managers remain united in their unconditional support for European equities. Despite the poor performance of European equity markets in July, the Eurozone economy slowing down and the the conflict between Russia and the West exacerbating, a large majority of fund managers still expect European equities to generate returns of more than 5% on average over the coming year.
US equity sentiment is going down slightly, but its reading is still twice as high as the one for emerging market equities. Only one of 18 fund managers expects the US stock market to experience a serious setback, while half of the respondents believe the equity bonanza across the Atlantic will continue with renewed pace.
Fund selectors believe in EM
While fund managers have been sticking to developed market equities for more than a year now, fund selectors are poised for some notable changes in their asset allocation, EIE data gathered across Europe over the past months show. The number of US equity buyers has declined rapidly since the beginning of this year, with Pan-European sentiment now net negative. Since a couple of months this trend has swung over to Europe at least partly, as quite some fund selectors decided to stop increasing their weightings to the asset class. So far though, the number of Europe equity bears is still very small.
Pan-European equity sentiment