Investors becoming fearful of stagflation: poll
Investors have become increasingly concerned about stagflation over the past month, cutting back on equities and snubbing bonds in the face of slowing growth and rising prices, a survey showed on Wednesday.
Investment bank Merrill Lynch said its monthly poll of 204 fund managers across the world showed some of the most negative stances on equities it has seen in 10 years.
The main shift, the bank said, was in a view that global growth and profit expectations were falling just as expectations of higher interest rates were rising because of inflation.
“About 87 percent (of respondents) believe we are in a world of above-trend inflation and below-trend growth,” said David Bowers, Merrill’s poll consultant.
“People now believe we are in a world that is not only slowing but where short rates are rising,” he said.
The poll was taken during a period in which both the U.S free credit report.com. Federal Reserve and European Central Bank warned about inflation and hinted that interest rates were likely to stay unchanged or be raised despite slowing economies.
Specifically, 75 percent of fund managers in Merrill’s June poll said they believed the world economy would slow over the next 12 months, compared with 61 percent in May.
The same percentage said corporate profits would deteriorate, a small increase from May, while 59 percent said global inflation would be higher compared with 53 percent in May and just 44 percent in June.