Why have fund managers grown

more bearish on Asian equities?

Fund managers investing in Asia outside of Japan became more bearish on equities in the third quarter, with more increasing their holdings of cash and bonds, according to a HSBC Holdings survey.

The survey by HSBC of 12 investment management companies that oversee a combined $4.2 trillion in assets showed 44 percent of fund managers polled were “underweight” equities in the third quarter, compared with ten percent in the preceding three months.

The proportion of fund managers with an “overweight” allocation to bonds rose to 44 percent in the third quarter, up from 20 percent in the April to June period, the survey said.

“Investors continue to take conservative positions, moving away from volatile equity markets and finding a safe haven in bonds and cash,” said Bonnie Tse, HSBC's head of wealth management for personal financial services in the Asia Pacific.

The MSCI Asia Pacific excluding Japan Index, which tracks 642 stocks, has declined 31 percent this year, as concerns over slowing global growth and more than $500 billion in writedowns and credit losses at financial institutions hurt profits.

Investors pulled a net $50 billion from equity funds in the second quarter and put a net $15 billion into balanced funds and $11 billion into money-market funds, the HSBC survey showed.


Will investors continue to rely on cash and bonds? How would this trend affect the Asian equity market?