Discouragement spreads about fund managers. The latest research by Bank of America Merrill Lynch shows that investors' expectations about the world economy have "drastically deteriorated", and They are at the lowest time in the past 10 years.
85% of European fund managers regard the world economy as "in the last part of the economic cycle" and that the slowdown may cause financial instability.
This generalized pessimism has deteriorated at full speed. In August, only 7% of managers expected the growth of the world economy to slow in the next 12 months. In September, that percentage increased to 24% and now it is almost 40%.
In this situation, one of the measures taken by fund managers is to reverse their risk investments and increase their exposure to cash. Purchases of government debt issued by the United States also increase, as the return on ten-year loans is 3.17%.
Among the most important risks for the markets, the surveyed managers emphasize the trade war that the United States maintains against China and the European Union. A few months ago, his biggest concern was the pace of withdrawing stimuli from the Federal Reserve.
The escalation of the tariff dispute between the US and China in October also led to the collapse of the confidence of German investors, according to the indicator drawn up by the economic research institute ZEW, whose expectations were at the highest level. low since August 2012, when the market still digested the announcement of the rescue of the bank of Spain.
In concrete terms, the index corresponding to the expectations of German investors for the next six months has dropped to -24.7 points in October compared to -10.6 last month, reaching the worst level since August 2012, well below the historical level. average of 22.8 points.
In fact, the fall of 14.1 points in the month of October is the second largest monthly decline in the whole historical series, only surpassed by the decline recorded in July 2016 after the victory of the supporters of the Brexit & # 39; in the referendum on the sustainability of the United Kingdom in the European Union
"The expectations for the German economy are particularly weakening due to the intensification of the trade dispute between the US and China," said ZEW president Achim Wambach and added that the worst expectations for German exports are beginning to be reflected. in the evolution of Germany's sales abroad.