Focus shifted from bonds to equities

 More fund managers are bullish on equities with 40 per cent of them holding overweight views in the third quarter 2012 from 25 per cent in the second quarter. Only 10 per cent of fund managers (against 25 per cent in the second quarter 2012) held underweight views on equities this quarter.  
 As safe haven flows have pushed some bonds to overvalued levels, fund managers turned cautious on bonds with 30 per cent holding underweight views in third quarter 2012, compared to 0 per cent in the second quarter 2012. A tenth of fund managers held a positive outlook towards bonds (10 per cent).  
 More fund managers are neutral (56 per cent) on cash in third quarter 2012, reflecting a relatively optimistic market outlook.  
 “The survey shows an improvement in investment sentiment across global fund managers. With fears of a disintegration of Europe’s currency union somewhat abated, fund managers are starting to see opportunities in equities based on valuation," said Vineet Vohra, HSBC’s Regional Head of Wealth Development, Asia Pacific.
 Seven in ten fund managers held overweight views on North American equities given its relatively resilient economy, while half held overweight views towards European equities except UK.
 Fund managers turned more positive on Asia with 40 per cent and 50 per cent of fund managers holding overweight views on Asia Pacific ex Japan and Greater China equities, respectively. No fund manager held underweight views on these particular equity funds.
 “The survey points to regions that offer strong growth opportunities. Investors continue to favour Asia Pacific equities particularly in Greater China as further monetary easing policies and fiscal stimulus in China are expected while the majority of fund managers are positive on North American equities, on the back of market performance and signs of economic recovery," said Eric Fu, HSBC’s Head of Wealth Development, Hong Kong, Retail Banking and Wealth Management.
 In terms of bonds, with investors continuing to look for yield in a low-interest environment, high yield bonds remained the most favourable within this asset class with 80 per cent of fund managers holding overweight views.
 As in the previous quarter, all fund managers are bearish on European bonds in third quarter amidst the unsettled Eurozone debt crisis.