Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Vaccine rollouts trigger "buy the reopening trade" - BofA

Published 12/15/2020, 07:47 AM
Updated 12/15/2020, 07:55 AM
© Reuters. FILE PHOTO:New York Stock Exchange opens during COVID-19

© Reuters. FILE PHOTO:New York Stock Exchange opens during COVID-19

LONDON (Reuters) - Investors turned more bullish on beaten down pockets of equity sectors and commodities, gearing up for the "reopening trade" as COVID-19 vaccines were being rolled out, BofA's monthly investor survey showed on Tuesday.

The euphoria sent investors' cash holdings down to 4% in December - to pre-COVID-19 levels - according to the survey of 217 fund managers with $576 billion in assets under management.

The drop triggered a contrarian "sell signal", BofA added. Global stock valuations are nearing the highs seen during the dotcom bubble, with the MSCI World index trading close to 20 times forward earnings.

A whopping 60% of the investors surveyed by BofA said they expected emerging markets to outperform in 2021 by a big margin amid a falling dollar, vaccine rollouts and rising expectations of a V-shaped economic recovery. Allocation to emerging market stocks hit the highest since November 2010.

"2020 was a year utterly dominated by COVID-19 which caused the quickest economic and financial market collapse of all time. However, just half a year later, recovery expectations have also surpassed prior recessions in both speed and magnitude," BofA wrote in a note.

COVID-19 was still seen as a threat with 30% of the investors in the survey citing it as a top tail risk, though lower than the 41% seen in November. Fears of inflation featured as the second top tail risk.

Long U.S. tech remained the "most crowded trade" for the eighth straight month. Short dollar and long bitcoin came second and third.

Bitcoin has gained 170% this year as hedge funds, family offices and even old-school insurers stormed into the cryptocurrency this year. Some Wall Street banks also began talking up its role in portfolios.

© Reuters. FILE PHOTO:New York Stock Exchange opens during COVID-19

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.