Global investors’ confidence in the world’s economic outlook has fallen significantly due to concerns over China and emerging markets, according to the Bank of America Corp (NYSE:BAC) Merrill Lynch Fund Manager Survey for September. Asset allocators have adopted a “risk-off” stance in response.
- Threat of recession in China increases as biggest tail risk; concern over a potential emerging markets debt crisis also rises sharply.
- Investors’ risk appetite evaporates: equity overweights are down a net 24 percentage points in a month, while commodity shorts are extended.
- Sentiment towards Global Emerging Markets sours further, with underweights at a record net 34 percent and aggressive UWs are at an all-time high.
- Cash balances are back up to 2008 crisis level of 5.5 percent.
- Hedge fund net exposure and perception of market liquidity conditions are both at the lowest level in three years.
- Investors’ expectation of U.S. Fed rate rise has been postponed to Q4.
“Investors were already positioned for lower growth in China and emerging markets, but their risk-off stance has intensified. Contrarians will be noting the aggressive underweight positioning in emerging markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
“European equities have been hurt by the risk-off trade, but they remain a favored market,” said James Barty, head of European equity strategy. (Original Source)
Shares of Bank of America closed yesterday at $15.96. BAC has a 1-year high of $18.48 and a 1-year low of $14.60. The stock’s 50-day moving average is $16.87 and its 200-day moving average is $16.52.
On the ratings front, Bank of America has been the subject of a number of recent research reports. In a report issued on September 10, Wells Fargo analyst Matthew Burnell upgraded BAC to Buy. Separately, on September 8, Nomura’s Steven Chubak upgraded the stock to Buy and has a price target of $18.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Matthew Burnell and Steven Chubak have a total average return of 14.2% and 5.2% respectively. Burnell has a success rate of 61.5% and is ranked #1011 out of 3757 analysts, while Chubak has a success rate of 52.9% and is ranked #1530.
Overall, one research analyst has rated the stock with a Sell rating, 2 research analysts have assigned a Hold rating and 12 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $20.25 which is 26.9% above where the stock closed yesterday.