Interest in European stocks hits 6-year high

Confidence in the eurozone economy is continuing to pick up pace, with investors’ bullishness towards European stocks reaching a six-year high, according to latest research.

The September edition of the fund manager survey from Bank of America/Merrill Lynch shows that investors intend to maintain money flows into Europe; a net 27 of investors saying that the eurozone is the region they would most like to “overweight” in the coming 12 months.

Global investment in eurozone- based equities is now back to pre-financial crisis levels, reaching their highest levels since May 2007.

“The switch in sentiment towards Europe has been swift. Only a net 2% expressed a desire to overweight the region in July,” the survey says.

Half of the panel believes that strong EU growth is the most likely solution to the region’s debt crisis, versus only 19% who believe that ECB-led stimulus is the key solution. However, cash levels remain high amongst investors and have recently risen to an average of 4.6% of investment portfolios.

According to Michael Hartnett, chief investment strategist at BofA/Merrill Lynch Global Research: “Investor cash levels remain high because the fear of bond markets is greater than the appetite in equity markets. Belief in Europe’s economy is robust and, though eurozone equities have come back strongly, value remains the best on offer in developed world markets.”