Expected U.S. Federal Reserve rate hike fuels global exit from U.S. stocks, surveys show

81% of pension funds plan to manage more of their assets in-house.

Global investors are becoming more bearish on U.S. stocks while also showing a desire for Canada ahead of an expected U.S. Fed rate hike this year, new surveys show.

The Bank of America Merrill Lynch global fund manager survey for March showed that a net 19% of investors are actually underweight U.S. equities, the biggest underweight reading since January 2008.

\”Global investors have significantly pared back U.S. equity allocations as belief grows that the U.S. Federal Reserve will raise rates within the second quarter,\” the bank said in its report.

By contrast, an internet 6% of global investors were overweight U.S. stocks in February. The swing comes as a net 23% of global fund managers state that U.S. stocks are overvalued, which is the highest proportion since May 2000.

But while investors grow pessimistic about U.S. equities, they getting bullish on other areas of the world. Earlier this week, Statistics Canada says foreign investors added a net $5.7-billion in Canadian bonds and stocks in January.

Avery Shenfeld, chief economist at CIBC World Markets, said the strong inflows suggest global investors think the Canadian dollar’s?slide is almost over, opening up the potential for currency gains on their investments.


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