Mumbai: American investors have signaled a possible bursting of the IT bubble after the technology sector remained a favourite for global investors in the past three years, according to a survey released on Tuesday.
According to the Bank of American Merrill Lynch (BofAML) survey of fund managers for July, technology has been a favourite sector for global investors for the past three years, but US investors have signalled a possible bursting of the IT bubble.
Overall, a net 22 percent of US respondents to the regional survey are overweight on technology - a sharp fall from a net 41 percent a month ago. Within those figures, 19 percent of the panel are underweight IT, up from 9 percent in June, the survey said.
Global investors have also scaled back technology holdings. A net 32 percent was overweight on technology, down from a net 41 percent in June.
US equities have declined in popularity as global asset allocators have cast their net around the world. A net 14 percent of respondents are overweight on US equities, down from a net 31 percent last month. At the same time, asset allocators have reduced their underweights in euro zone, UK and Japanese equities.
The survey said a sharp drop in expectations of corporate profit growth has weakened investor confidence.
BofA Merrill Lynch's Growth Expectations Composite has fallen to 37 in July from 43 in June and 54 in May. A severely deteriorating outlook for profits is driving the fall in confidence. A net 38 percent of investors say corporate profits will worsen in the coming 12 months - compared with a net 19 percent a month ago, it said here.
Expectation that corporates can grow profits by 10 percent or more is at its lowest point since April 2009. A net 69 percent of the panel expects corporates profit growth to be less than 10 percent in the coming year. A net 58 percent says operating margins will decrease, up from a net 41 percent in June.


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