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Investors have pulled cash from European stocks over the past
year, betting the market would be weaker compared with the
United States and other regions as euro zone economic growth
slows and Britain's chaotic exit from the European Union raises
worries about disruption to its economy.
Short European equities replaced long emerging markets, which
held the title for just one month.
The shift in investor views reflects broader uncertainty about
the direction of financial markets as the Federal Reserve and
ECB keep interest rates on hold amid signs that growth is
slowing.
It also suggests that fund managers believe the gloom that has
seen $30 billion leave European equities so far this year may
have been overdone.
In a note on Sunday, Morgan Stanley chief European equity
strategist said he believes Europe is set to surprise on the
upside as issues that weighed on growth in the second half of
last year start to fade.
A slowdown in China, the world's No. 2 economy, topped the list
of biggest tail risks, ousting the trade war, which had been at
the forefront of investor concerns for the previous nine months,
according to the survey.
BAML's March survey - conducted between March 8 and 14, among
239 panelists managing $664 billion in total - also indicated
that investor risk appetite had continued to fall, with global
equity allocations remaining at September 2016 lows.
(Reporting by Josephine Mason and Helen Reid, Editing by Helen
Reid)
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