According to international news organization Reuters, investors all around the world bracing themselves for losses in the stock market. Bank of America Merrill Lynch’s monthly survey released on Tuesday found that “global investors’ equity allocations fell 6 percentage points in May and over a third of fund managers have taken out protection against sharp stock market falls in coming months,” Reuters said.
BAML noted that the proportion of investors readying themselves for falls in equity is the highest recorded in the history of the survey. 37 percent of respondents cited trade war as their primary concern, and 16 percent said Chinese slowdown was their main worry.
The total value of funds managed by the survey respondents was close to $687 billion, and the study was conducted from May 3 to May 9 as tensions between the U.S. and China escalated. The number of individuals citing trade war as their biggest worry rose by 17 percent from last month.
As President Donald Trump implemented a tariff increase on China last week and Beijing retaliated on Monday, the investors’ worries appear to be justified.
“A record 34% of investors had bought portfolio hedges, BAML said, adding that allocation to safe-haven cash had risen seven percentage points to a net 33% overweight,” Reuters reported.
“(Investors) are well-hedged but not positioned for a breakdown in trade talks,” said chief investment strategist Michael Hartnett. “Investors see little reason to ‘buy in May’ unless the 3Cs – credit, the consumer, and China – quickly surprise to the upside.”