InvestorQ : I was just reading a BOFA survey news that investors thing markets are overvalued? How true is that?
rhea Babu made post

I was just reading a BOFA survey news that investors thing markets are overvalued? How true is that?

Answer
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3 months ago


That is true but the survey applies to global investors not just to investors in India. The survey by Bank of America – BOFA figured out that 78% of global investors found the markets overpriced at the current juncture. Despite this view, risk appetite surged in June and most fund managers reduced their cash holdings and added more risk assets in their portfolio. The most fleet-footed investors in the world, Hedge funds, increased their equity exposure to 52%; highest since 2018. Why are investors taking on more risk even as perception of overvaluation exists? You must blame it on liquidity. The global liquidity glut by central banks is expected to create another round of asset price inflation. As a result, equities are likely to benefit the most. One explanation for this equity rush could be that 82% of the respondents surveyed by BOFA expect an economic recovery. Of course, only 18% expect a V-shaped recovery while 64% expect the recovery to be either U-shaped or W-shaped. That is something that will only be evident in the next few months.