MANAMA: Following the record fall in oil prices during the last three months, oil is no more preferred choice for investors, a survey suggested. According to Merrill Lynch’s Survey of Fund Managers for December which was released here yesterday, “a net 47 percent of global asset allocators say that oil is now undervalued after falling in price by more than 60 percent in three months. However, investors in Europe have continued moving out of basic resources and oil and gas.”
The survey further revealed: “About 88 percent of the investors believe that the world economy is in recession and over 33 percent express desire for further fiscal stimulus.” According to survey findings, investor sentiment has stepped back from the brink of despair, but more than a third of investors want to see greater fiscal stimulus.
December’s survey contains evidence that the rate of deterioration is slowing. The net balance of investors who expect the global economy to worsen in the coming year has fallen to 36 percent, down from 60 percent in October. More than a quarter of respondents believe the economy will strengthen in 2009. Cash levels average 5.5 percent, up from 5.1 percent in November, the highest level since 2001. Furthermore, a widespread perception exists that stocks are cheap, both in absolute terms and relative to bonds.
The proportion of investors who view monetary policy as too restrictive has tumbled to 29 percent from 68 percent in October. However, 37 percent of investors believe that fiscal policy is too restrictive, suggesting further stimulus dollars are needed before investors will commit cash.
