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FRANKFURT (DEUTSCHE-BOERSE AG) – March 17, 2022. FRANKFURT (Frankfurt Stock Exchange). It should hardly have surprised anyone that the conflict between Russia and Ukraine not only dominated the headlines, but is now also seen by international fund managers (44 percent) as by far the greatest risk for the financial markets. This is the result of the Bank of America survey published yesterday.
At the same time, there was a veritable exodus from eurozone shares among the fund managers surveyed. While 30 percent of those surveyed were still overweight in shares there in February, the bottom line was that 18 percent (balance of positive and negative answers) of asset managers said they were underweight in the euro area. Even if the results of the survey are now almost a week old, it is remarkable how the DAX has recovered since our last sentiment survey, albeit with strong fluctuations in some cases: a weekly gain of more than 7 percent results for key points.
Domestic investors are holding out
Meanwhile, it cannot be said that the majority of the domestic institutional investors we surveyed with a medium-term trading horizon would share the pessimistic attitude of their international counterparts. Although our Börse Frankfurt Sentiment Index fell by 12 points to a new level of +14, the decline was comparatively moderate on balance given the significant rise in the DAX. While the group of bears has grown by a third, the increase is fueled in equal parts not only by former optimists who have reversed their position, but also by previously neutral investors.
The Frankfurt Stock Exchange Sentiment Index of this panel, which remains unchanged at a value of +8, shows that private investors have remained largely inactive. However, at second glance one recognizes that the polarization between bulls and bears has decreased, so that the neutral actors experienced an increase of 6 percent of all respondents. In contrast to the institutional counterparts, a large part of the mostly bullish exposure is likely to be well under water.
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Bullish for different reasons
With today’s survey, the mood gap between private and institutional investors has narrowed again. In any case, it remains interesting that domestic investors are much more optimistic than the extremely pessimistic international fund managers surveyed by Bank of America, although it must be remembered that the latter were already between March 4th and 10th, almost a week before the participants in our panels were surveyed. The unbroken optimism among domestic private investors is understandable, as many of them are forced to remain trapped in their bullish positions, which are still causing losses. On the other hand, the mood among the institutional investors in our panel is less conclusive, although the lack of willingness to take profits could be an indication that the commitments underlying the optimism are rather low in volume.
All in all, one has to come to the conclusion that the domestic optimism, which in relative terms over a three-month period also comes across as more of a neutral guise, is not a burden for the DAX, but is also not a strong driver. And so the stock exchange barometer remains the plaything of short-term players, and sustainable stabilization can only be achieved when long-term capital flows are once again interested in the domestic markets.
March 16, 2022, © Goldberg & Goldberg for boerse-frankfurt.de
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