Investor sentiment collapsed in March on the back of the coronavirus, oil shock, recession fears and surging debt default risk, according to the latest Bank of America Global Research global fund manager survey, released Tuesday.
Rising recession expectations prompted fund managers to slash global growth expectations by 67 percentage points to net 49%, the biggest monthly drop ever, going back to October 1994. Seventy-two percent of investors expected global growth to weaken over the next 12 months, while only 23% expected it to be stronger.
Inflation expectations fell 71 points to net 31% of investors expecting a lower global consumer price index in the next 12 months, the lowest level in more than eight years.
Eighty-three percent of survey participants said they expected below-trend growth and inflation in the global economy over the next 12 months, up 16 points from February, while just 9% thought the global economy would experience below-trend growth and above-trend inflation.
The survey was conducted March 6 to 12 among 207 panelists with $571 billion in assets under management.
Global corporate profit expectations dropped 49 points month over month to net 64% of investors saying they did not expect profits to improve over the next 12 months.
A record net 53% of investors said corporates were overleveraged, and 61% wanted corporates to improve balance sheets, the highest level since June 2009.
Fund managers’ average cash balance shot up to 5.1% from 4% in February, the fourth largest monthly increase on record.