Concern over China’s sputtering economy has created a “dramatic shift” in investors’ equity allocation — a rush toward the US and an exodus from emerging markets, Bank of America’s latest global fund manager survey showed.
BofA said the “avoid China” theme has become one of the biggest convictions among the surveyed investors with $616 billion in assets under management. A net zero percent of the lot expect stronger economic growth for the country in the near future, a massive reversal from 78% in February this year, and the lowest since the lockdown lows of last year.
The trend is another signal of China’s declining heft in the global money pool. Doubts over the investability of Chinese equities have gathered steam as Beijing’s efforts to restore confidence have limited impact and as the West steps up oversight of exposure to Asia’s largest economy.
That’s had an impact on emerging markets equity allocation, which fell to a net 9% overweight in September from 34%, the lowest reading since November 2022. In contrast, allocation to US equities rose 29 percentage points to a net 7% overweight — the first overweight reading since August last year, according to the survey.
US equities have outperformed global peers this year, with the S&P 500 Index rising 17%. Meanwhile, the MSCI Emerging Markets Index has only gained 2%.