Fund managers around the world are
cooling toward technology, media and telecom stocks, which
have suffered a humbling global stock market shakeout, according
to the monthly Merrill Lynch Gallup survey released on Tuesday.
Fund managers who are bullish on TMT stocks fell by as much
as ten percent, while bears on the three sectors rose sharply.
Instead, money managers are turning to "defensive" stocks,
such as pharmaceuticals and consumer products, betting that they
would fare better in periods of stock market volatility and
High-flying technology stocks suffered a rout in the month
since the last poll was taken, with the bellwether U.S. Nasdaq
index falling more than 17 percent.
A declining 57 percent of the 253 funds in the survey are
expecting stronger global economic growth in a year, down from
67 percent in March.
Fund managers also expect economic growth to slow in every
major economy in the world save Japan in 2001, with the U.S.
slated for a decline from 4.2 percent to 3.4 percent.
"Economic optimism is falling in almost every region,"
said Trevor Greetham, Merrill Lynch global strategist.
"By shifting into defensive sectors markets may be pricing
in a peak in global growth." The euro remains the currency of
choice on a year's view, favored by 54 percent of respondents,
but the yen saw a sharp uptick in support, from 12 percent to 22
Fund managers also see declining corporate profits growth in
every major market except Japan in 2001, with Europe seen
falling to 13.7 percent from 15.3 percent.
Funds remain sellers of U.S. shares, with sellers
outnumbering buyers by about ten percent.
But net support for Japanese equities climbed above twenty
percent, helped by strong demand among local Japanese managers,
according to the survey.
On average equity funds were sellers of U.S. stocks but
buyers of every other major market.
The move away from TMT was especially marked in continental
Europe, where funds are now net bears of media shares, which had
been the fourth most popular sector in March. Support for
telecom and technology shares also crumbled.
Whereas a net 13.2 percent of European managers had been
bulls of software and computer services shares in March, April
found only support from a net 3.4 percent.
"The European love affair with TMT has soured," said
"Managers are much less bullish on the tech and telecom
sectors and have turned bears of media for the first time since
"In preference, managers have turned bullish on interest
rate sensitive financials and defensive pharmaceuticals."
Japan-based fund managers are strongly positive on Tokyo
shares and the yen, with buying support at near record levels.
Bulls of Japanese stocks outnumber bears by 75 percent and
78 percent of managers are overweight domestic equities, the
Fully 62 percent named the yen as their currency of choice
on a year's view, a record and a big increase from 39 percent a
The survey, conducted between March 31 and April 5, included
responses from 253 institutions globally controlling assets of