Fund managers increasingly fear global slowdown

Fund managers increasingly fear global slowdown - Merrill Lynch

	Published : Wed, 17 Oct 2007 13:23 By : Agencies Print this Story

LONDON (Thomson Financial) - Fund managers increasingly fear a slowdown in global economic growth in the wake of the summer's financial market turmoil, a key survey showed.

The Merrill Lynch October survey of fund managers showed 55 pct of them, on balance, expect global growth to worsen over the next 12 months.

This is worse than in September -- when the balance was 48 pct -- and far worse than in July, before the credit crunch kicked off, when it was just 5 pct.

Nonetheless, fund managers continue to believe overwhelmingly a global recession -- two quarters of declining GDP -- is unlikely.

They are gloomier on Europe's growth prospects than on the global outlook, apparently because of the strong euro and the European Central Bank's restrictive monetary policy. A balance of 62 pct of fund managers surveyed expect European growth to slow, up from 45 pct in September.

Fears of a deceleration are causing investors to change their stock market strategies to focus on growth stories, the survey showed -- even as equities hit new highs, boosted by the US Federal Reserve's half-point cut in interest rates following the summer turbulence.

'When it comes to investment style, respondents are expressing a marked preference for growth over value,' said Bowers.

The balance of fund managers who believe 'growth' equities will do better than 'value' ones rose to 31 pct from 12 pct in July.

However, such growth stories are seen to be few and far between.

'Investors can identify only three sectors with strong growth characteristics: technology, materials and industrials,' said Bowers.

For this reason, emerging markets -- which feature many companies in these sectors -- are benefiting most from the equity rally, Merrill Lynch said.

alex.brittain@thomson.com

abr/ms1

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

Fund managers increasingly fear global slowdown - Merrill Lynch