Sentiment on Japan at three-year low

JIJI

Investors are most bearish about Japan in more than three years, according to October’s Bank of America Merrill Lynch Fund Manager Survey.

A net 38 percent of global asset allocators are underweight in Japanese equities, the worst reading since March 2009, up from a net 23 percent in September, the survey shows.

For the second consecutive month, a net 24 percent of investors say Japan is the region they most want to underweight.

“One of the reasons why we have seen the deterioration in Japan is that we have not yet seen a strong pickup in U.S. consumer sentiment,” said John Bilton, European investment strategist at BofA Merrill Lynch Global Research. “Japan needs a weaker outlook for the yen and needs a stable local and political backdrop.

“If we see an uplift in global sentiment and see that wash into the U.S. consumer figures, then I think Japan would look like an interesting catchup trade,” Bilton added.

The survey also points to growing concerns over the impact of the Senkaku dispute on trade.