Global investors cut equity holdings by the most in two-years in February, a Bank of America Merrill Lynch survey showed on Tuesday, as world shares had their worst week since early 2016, Reuters reported. The BAML survey of 196 participants with a total of $575 billion under management was conducted between Feb. 2 and Feb. 8, when world equity markets fell by more than 5%. The sharp selloff followed higher than expected US wage growth data which raised fears the US Federal Reserve would have to tighten faster than previously anticipated. In the poll, just 5% of fund managers said global interest rates would be lower in the next 12 months, with 80% expecting them to rise. “The February fund manager survey allocation is positioned for higher rates and a weak US dollar but is now less equivocally pro-cyclical and risk-on,” the bank said. Higher bond yields tend to hurt equities because they increase borrowing costs for companies and ultimately consumers. They also present an alternative to investors who may reallocate some cash from equities.
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