(Reuters) – Global investors’ equity allocations fell 6 percentage points in May and over a third of fund managers have taken out protection against sharp stock market falls in coming months, Bank of America Merrill Lynch’s latest monthly survey found on Tuesday.
The proportion of investors preparing for equity falls is the highest in the survey’s history, BAML said, noting that trade war was seen as the main risk by 37% of participants, followed by a Chinese slowdown which was picked by 16%.
The survey of funds managing close to $687 billion (530 billion pounds) was conducted May 3-9 just as Sino-U.S. trade talks turned acrimonious. The proportion of funds naming trade war as the biggest risk rose by 17 percentage points over last month, and latest developments appear to have vindicated their fears.
President Donald Trump on Friday carried out his threat to hike tariffs on an additional $250 billion of Chinese goods.
China’s decision on Monday to slap on tit-for-tat tariffs sent global equities into their worst one-day fall this year.