BofA: European recessionary fears remain as managers bet against global downturn
Earnings per share is widely expected to drop across the continent (89%), with those viewing European equities as overvalued rising to a three-year high at net 29%.
The Bank of America's European Fund Manager survey revealed that 71% of managers predict a gloomy outlook for European growth in the coming months, up from 66% last month, while 61% continue to expect a recession in the continent.
However, those expecting a global recession dropped markedly, from net 39% in July to net 14% in August, well below November 2022's net 77% peak.
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The high expectation of European recession has created «one of the widest gaps relative to global recession expectations since the euro area debt crisis», BofA noted, as 78% predict a slowdown in Europe.
Earnings per share is also widely expected to drop across the continent (89%), with those viewing European equities as overvalued rising to a three-year high of net 29%.
However, managers remain unsure, with 29% citing diminishing equity exposure as the key risk to their portfolios, up from 18% last month.
By sector, 50% of managers expected downside for European cyclicals compared to defensives due to slowing growth, compared to just 32% last month.
Even so, tech has overtaken banks as the largest sector overweight in Europe, followed closely by pharmaceuticals, while chemicals have fallen to most underweight.
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By contrast to Europe, a majority (53%) expected US growth to remain resilient in the near term, even if it ultimately slows in response to monetary tightening, while 45% expect an immediate downside.
A clear plurality of managers (45%) said that high
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