Eurozone concerns push confidence lower: survey
A survey of 261 of the firm’s fund managers for July found growth expectations had fallen from a score of 43 in June to 37 in July on BofAML’s growth expectation composite. The score was as high as 54 in May.
With continued concern over the eurozone, BofAML said a net 38 perc ent of investors thought corporate profits would worsen in the coming 12 months, a substantial rise compared to 19 percent in June and a 39 percentage point drop since May.
The two-month drop is similar to the fall in confidence in summer 2011 as the sovereign debt crisis took shape.
According to the report, the belief of fund managers that corporates could grow their profits by 10 percent or more was at its lowest point since April 2009. A net 69 per cent of those polled expected growth to be less than 10 per cent in the coming year, with 58 per cent stating operating margins will decrease, up from a net 41 per cent in June.
Gary Barker, head of European equities strategy at BofAML global research said: “July’s survey highlights that corporate profit expectations have to catch up with the downgrade in the economic outlook we have seen the past two months.”