Survey shows funds buying on weakness

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The Independent Online
RECENT weakness in bond and equity markets is seen by professional investors as a buying opportunity rather than as a sign of worse things to come, according to Smith New Court's latest survey of fund managers, writes Terence Wilkinson.

The SNC July survey finds that 49 per cent of fund managers intend to run down their cash balances and 7 per cent plan to increase them. The net balance of 42 per cent is the highest for a year and is in strong contrast to the February survey - the start of the recent slide in share prices - when a net 6 per cent of managers said they would be increasing cash holdings.

Japanese equities head the buy list, with a net 48 per cent of fund managers planning to increase exposure. UK equities and gilts are also in favour - a balance of 20 per cent of managers plan to increase holdings. But sentiment towards the US has worsened, with 13 per cent of managers planning to cut holdings. A similar proportion intend to reduce exposure to Continental Europe.

In terms of individual markets 45 per cent of managers are bullish abouth the Japanese Nikkei index over the next three months. The FT-SE 100 is expected to rise by 37 per cent of managers. Only a net 2 per cent expect the FT-SE Euro-Trak index to rise and managers are bearish on balance about the Dow Jones Industrial.

Expectations about dividend growth in the UK this year continue to be revised upwards, to 8.6 per cent in July.