Global money managers in financial crisis style flight from stocks

Global money managers are holding the lowest level of stocks in their portfolios since the global financial crisis in 2008, revealed a closely watched survey published today.

Expectations for world economic growth dropped to the deepest point on record, as did bets on expansion in corporate earnings, Wall Street investment bank Bank of America found.

The bottoming out risk appetite reflects the “dire level of investor pessimism,” Bank of America said.

Mounting fears over some of the world’s biggest economies falling into recession soon has prompted fund managers to park the biggest amount of their holdings in cash in over two decades.

A severe inflation surge is straining households and corporates to maintain economic activity levels. 

Central banks are raising interest rates at a rapid clip to tame living costs, clamping down on spending and investment.

Higher borrowing costs tend to weigh on equity markets by making fixed income assets more attractive and hitting future stock valuations.

The S&P 500, Wall Street’s flagship index, has shed around 18 per cent since the beginning of the year and has tipped into bear market territory several times.