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 The poll of 16 European asset managers was conducted between Dec.
15-21, coinciding with the U.S. Federal Reserve's Dec. 16 interest
rate rise, its first in nine years.
While the Fed move showed confidence in the U.S. economy, scepticism
prevails about a sustained global recovery. Weaker growth in China
is dragging down other emerging markets, while in the United States
too, dollar strength has brought industrial growth to a
near-standstill.
The share of equities in global balanced portfolios in Europe dipped
2.5 percentage points from November to 45.2 percent, the poll
showed. This was the lowest allocation since September, which in
turn was a nine-month low.
"(U.S.) rate hikes are occurring way too late in a cycle that is
already ebbing," said Raphael Gallardo, asset allocation strategist
at Natixis.
"If the Fed hikes more than twice in the first half of 2016, it
might trigger a downturn in the second half, with potential
financial tensions in equity and credit markets."
The Fed is expected to raise rates again in March 2016 but move very
slowly after that, Reuters polls show.
Holdings of U.S. equities dipped almost one percentage point to 36.5
percent while U.S. debt allocations were steady after being cut
gradually since September.
"We see the possibility of a cyclical uptrend in 2016, against an
overall economic backdrop that remains fragile and that points
toward structurally lower growth," said Giordano Lombardo, chief
executive and group chief investment officer at Pioneer.
"We are moderately positive on risky assets, especially equities,
but risks of "tail risks" events are on the rise," he added.
More broadly, bonds benefited, with global allocations rising to 39
percent, the highest since July 2013 and up more than two percentage
points from November. Bond holdings were 35.5 percent at the start
of 2015.
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Some of the disenchantment can be attributed to the European Central
Bank, which extended its asset purchase program early in December
but did less than investors had expected.
Euro zone bond holdings dipped to 50.3 percent, the lowest level
since January 2015.
UK stocks and bonds were in favor, rising two and one percentage
points respectively.
Despite tentative signs of improvement in battered emerging
economies, investors remained wary, noting stagnant world trade,
high debt levels and weak commodity prices. Crude prices have hit
11-year lows this week.
For Joost van Leenders, chief economist for multi-asset solutions at
BNP Paribas Investment Partners, it still boils down to what the Fed
will do.
"Risks are still in high leverage in China and some other emerging
markets, and also in uncertainty around the U.S. tightening cycle
and its impact on the dollar," he said.
(Additional reporting by Claire Milhench and Maria Pia Quaglia
Regondi; Editing by Gareth Jones)
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