The risk of a global recession is highest since August 2009, according to a survey of fund managers, as slowdowns in growth, trade and political uncertainty have an impact on investor sentiment.
About 38% of investors survey the Bank of America Merrill Lynch Management Fund study for September, released Tuesday, expected a decline next year. This figure was 34% in the August survey, the highest response since October 2011.
Investors surveyed between September 6 and 12 still show no signs of asset value depletion, remaining overweight on investments that transcend during a low growth and low tempo background. Only 7% of respondents expect share values to exceed growth over the next 1
Risks and Opportunities
A study of 235 participants with combined assets of $ 683 billion revealed that investors see the German fiscal stimulus as having the highest potential for risky assets in the next six months, followed by a decrease at a rate of 50 basis points from the US Federal Reserve and infrastructure spending in China.
On the US front, investors surveyed identified infrastructure expenditures as the area of economic policy with the greatest bilateral support.
The trade war between the US and China continues to top the list of investor risk risks, with 40% citing trade as a major problem. When asked about a resolution to the trade war, 38% of those surveyed said the current opposition between the two largest economies in the world was "the new normal," compared to just 30% predicting a resolution before the 2020 US presidential election.  Behind trade tensions, monetary policy impotence and a possible bond market bubble were the next two most notable problems, each cited by 13% of investors, with the Chinese slowing rounding the top four to 12%.
The distribution of bonds fell 14 percentage points to a net weight of less than 36% after the distribution of bonds for the survey in August reached its highest result since September 2011. US long-term bonds for finance remain the most crowded trading area for the fourth consecutive month, the study said.  At the regional level, US equity allocations jumped 15 percentage points to a 17% net position, the largest monthly increase since June 2018, making the US the most preferred region among fund people
"We remain fundamentally bullish as investors showed only a modest improvement in their risk appetite this month," says Bank of America Merrill Lynch Chief Investment Officer Michael Hartnett.
Hartnett concluded that fiscal stimulus would provide the most powerful impetus to investor optimism, consolidating the rotation of 'bond to equity, value growth'.