On the other hand, HSBC’s Emerging Markets
(EM) Sentiment Survey for Q2-2020 reveals around 75 per cent of the investors surveyed are neutral to bearish (38 per cent bearish, 37 per cent neutral) on EM prospects over the next three months despite a substantial rally. The survey was conducted between May 12 and June 2 among 213 investors from 198 institutions, representing over $600 billion of assets under management in EM. In stark contrast to the BofA survey, HSBC
suggests cash levels with EM fund managers remain sizeable, with more than 50 per cent of investors holding over 5 per cent of their AUM in cash.
“More investors expect the world economy to recover from the Covid-19 shock later than H2-2020.Meanwhile, investors noted that in the equity markets
Brazil, Turkey and India had a more negative outlook,” the HSBC
survey findings suggest.
Though analysts led by Jonathan F Garner, chief Asia and emerging market strategist at Morgan Stanley
have marginally raised target levels for key indices
across the globe, they continue to see geopolitics and Covid-19 impact on growth (ex-North Asia) as key bear-case risks to their forecasts.
“Our equity market targets (now for June 2021) move up, although our view remains cautious and we expect a lop-sided "W" formation to take place over the next 3-6 months. We raise our target for TOPIX to 1,550 (-1 per cent from spot), for MSCI EM to 920 (-7 per cent) and for MSCI China to 84 (-1 per cent). Only for CSI 300 (target now 4,150, +4 per cent from spot) do we have upside,” they wrote in a June 15 report. As an equity strategy, they remain overweight Japan and China-A shares, but upgrade Indonesia and Greece alongside overweight in Singapore, China, India, Russia and Brazil.
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