European equities OW surges to 20m high


BofA | Investors are most bullish on equities in over a year. Global investors increase equities allocation to net 31% overweight, the highest level since Nov 18, on the back of improving growth, profits and capex outlooks. Within regions, EM tops with net 25% OW, Eurozone is second with net 24% OW, its highest since May 18. UK remains at the bottom, but its UW is cut to the lowest in 4 years. Our BofA EU Risk Appetite Indicator improves to +52 (range -100 to +100) on rising FMS inputs, failing to reach overbought levels as flows lag the optimism. We believe EU stocks offer further upside and extremes remain unexploited.

Conviction on lower inflation backdrop remains high and is visible in sector and style allocation. The largest improvements are in Quality-biased sectors: Financial Svs, Technology and Healthcare, while positioning in more cyclical ones: Basic Resources, Construction and Chemicals drops the most. The strongest style view, according to net 49% European investors, lays in High Quality outperforming Low Quality. We believe good Value strategies will outperform next year.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.