Renewed optimism over China despite reduced risk appetite: BofA Merrill Lynch survey

Investors have returned from holidays with a defensive mindset but fresh hopes are emerging about China's economic prospects, says the BofA Merrill Lynch Survey of Fund Managers for September.

Sentiment over the Chinese economy has swung from significantly bearish to bullish in just one month. A net 11 per cent of respondents believe that the Chinese economy will strengthen over the next 12 months – a 30 per cent swing and the largest positive monthly change since May 2009.

The BofA Merrill Lynch Global Research franchise covers over 3,100 stocks globally and ranks in the top tier in many external surveys.

A total of 215 fund managers, managing a total of $579 billion, participated in the global survey from 2 September to 9 September. A total of 177 managers, managing $382 billion, participated in the regional surveys.

In August a net 19 per cent said that China's economy would weaken. In July a net 39 per cent were bearish over China.

Investors within Global Emerging Markets (GEM) have backed sentiment with action, racing back into Chinese equities. A net 22 per cent of the regional panel are overweight Chinese equities in September. In August a net 22 per cent were underweight China.