Investors ditch equities and seek cash in fear of recession

Since the 2008 financial crisis, investors have never been more concerned about global growth prospects. According to a survey carried out by BofA (Bank of America) with fund managers, they increased their cash reserves to the highest level in two years.

Most investors polled between March 4 and 10 — who together manage about $1 trillion in assets — expect a bearish wave in the stock market in 2022, i.e. a 20% drop. % or more of assets from their record highs.

The survey also showed allocations in global equities falling to their lowest levels since May 2020.

Cash levels among investors rose to nearly 6% of their portfolios, while allocations to commodities rose to a record 33%. Hedge funds’ net exposure to equity markets is at its lowest level since April 2020, according to the survey.

According to the investment bank, the most sought after positions are long oil/commodities, followed by technology and ESG stocks (acronym for good environmental, social and governance practices). Nearly half of investors polled expect oil to produce the best returns in 2022.

The European edition of the monthly fund managers survey provided a grim reading, with investors reducing their growth prospects for Europe in response to Russia’s invasion of Ukraine.

A full 69% of respondents expect the European economy to weaken next year, the highest proportion since 2011. The 81 percentage point difference from the 12% in February who still expected to see growth marks the biggest monthly drop since records began. of BoFA started in 1994.

Investors also slightly raised their expectations for the number of rate hikes by the Fed in 2022, even after liquidity conditions worsened considerably to the lowest level since the coronavirus pandemic hit. financial markets in March and April 2020.