International investors lose appetite for Euro stocks

The amount of international investors who feel the ECB will not undertake a round of quantitative easing to stimulate the eurozone economy, until next year at the earliest, has shot up 10% in the past month.

According to the latest fund manager survey from Bank of America Merrill Lynch, 25% of global investors don’t anticipate ECB quantitative easing measures until 2015, up from 15% in June. Only 12% of respondents said they expect Frankfurt to begin quantitative easing measures before the end of September.

“Regional investors now see global re-acceleration as the likeliest source of eurozone growth; 33% of respondents point to this driver after a rise of eight percentage points month- on-month. It has overtaken a renewed stimulus programme as the panel’s primary driver of regional recovery,” Bank of America said.

While the latest report shows the return of a bullish stance from investors on equity market outlooks, it notes international investors have lost a lot of appetite for European stocks — with demand for German stocks and periphery member state equities declining.

“As Europe’s recovery falters, the region is becoming a global passenger, as investors pin their hopes on growth elsewhere,” said Obe Ejikeme, European equity and quantitative strategist at Bank of America Merrill Lynch.

Meanwhile, for the seventh month in a row the survey shows investors calling for public companies to up their capital expenditure levels, with 65% of investors calling for this — a record.

The survey also shows that concerns among investors over issues like China defaulting on its national debt and eurozone deflation have faded. The prospect of geopolitical crises is now the greatest threat to financial market stability. A net 21% of respondents also said they regard global stock markets as being overvalued.