Emerging market investor sentiment: a tale of two surveys

By:
Kanika Saigal, Euromoney Skew
Published on:

While Bank of America Merrill Lynch's latest survey highlights investor panic, Société Générale's clients are more bullish relative to last month, despite the latest twists and turns in the eurozone crisis.


Even as investors scramble for information on the positioning of their peers and alternate gauges of market sentiment, more generally, sell-side analysts’ reports all too-often, the buy-side complains, constitute hefty tomes with backward-looking data.

That''s why Bank of America-Merrill Lynch’s monthly Global Fund Manager Survey, for example, is so well-read since it regularly surveys a whopping 260 panelists with some $689 billion of assets under management on a host of macro issues as well as their equity market positioning levels.

Société Générale''s fund manager survey is relatively-more modest since it is an informal cross-asset class emerging market client survey, involving 83 accounts in Asia, Europe, and in the US.
But, interestingly, the latest SocGen survey reports that in the near-term emerging market investors are much less bearish than they were last month:

In sharp contrast to last month when most investors had turned extremely worried, EM investors are now shifting their views to only a mild bearish bias. Indeed, the sentiment bias towards global emerging markets has improved dramatically compared to May. While a staggering 79% of clients were bearish towards GEM last month, now the percentage has been cut to a more subdued 47% for the near-term view. Meanwhile, 34 % of investors are now bullish, and 19% neutral. It is worth remembering that last month, only 10% of investors were bullish over a two-week horizon.

Compare Société Générale''''s view to BAML’s view – released just one day before:

Entering June, EM had been one of the last pockets of risk exposure for many global investors. But escalating threats to the fragile European financial system, volatile markets, and weaker macro data took their toll on appetite for EM. Investors have taken money out of EM equity funds for eight of the last ten weeks and by mid-month EM equities had erased all of their 2012 gains. Unsurprisingly, June’s Fund Manager Survey showed us that global investors had slashed their exposure to EM equities to the lowest level since October ‘11.

The story in pictures:
 
 Source: BAML

 
 Source: Société Générale

It would take just one Spanish auditor or one day in Greece for a wave of panic to submerge SocGen''s clients once more.