A new survey by Bank of America (BAC) has found growing signs that investors are throwing in the towel and capitulating as equity markets slide deeper into bear market territory.
According to Bank of America’s monthly fund manager survey, investors have reduced their exposure to stocks to levels lower than those seen during the 2008-09 financial crisis. The bank said that investors are capitulating as the outlook for the global economy grows “dire.”
Global growth and profit expectations are now sitting at all-time lows and expectations for a global recession are at their highest level since the onset of the COVID-19 pandemic, said Bank of America.
As a result, investors’ stock holdings are now at levels last seen in 2008 while cash holdings are at their highest level since the dotcom crash in 2001. Among fund managers, 58% said they’re taking fewer risks right now, a record that surpassed levels during the global financial crisis more than a decade ago.
Bank of America’s monthly survey includes 259 participants who collectively manage $722 billion U.S. The latest results found that persistent inflation is now seen as the biggest risk to stock markets, followed by a global recession.
The survey’s findings highlight this year’s equity selloff, which has sent the S&P 500 Index into a bear market and led European stocks to record their worst six-month decline since 2008-09.
In publishing its latest survey results, Bank of America said that its bull and bear indicator is currently registering “max bearish” levels.
Bank of America’s stock is down 30% this year at $32.26 U.S. per share.
