Bank of America Survey: Investors Concerned About Iran War and Private Credit; "Bubble-Inflated Bull Market" Sentiment Nearing Its End

Bank of America’s latest fund manager survey shows that as global investors turn more cautious, the recent “bubble-like bull market” sentiment is nearing its end.

In the report, strategist Michael Hartnett states that Bank of America’s broadest market sentiment indicator fell to a six-month low in March, while cash allocations surged significantly. Respondents cited ongoing tensions in Iran and turbulence in the private credit market as primary reasons for their unease.

The survey also reveals that cash holdings rose to 4.3% in March, the largest increase since March 2020. For the eighth consecutive month, respondents believe that private equity and private credit are the most likely sources of a “systemic credit event.”

With oil prices hovering around $100 per barrel, the Middle East conflict has shifted investors’ focus from last month’s AI race to risks facing the global economy. Meanwhile, concerns about banks’ private credit exposure are also intensifying.

However, investors are not as pessimistic as they were during the tariff turmoil in April last year. Hartnett notes that current positions are “still far from the extreme bearish levels seen during recent lows.” At the same time, anxiety over AI spending competition has eased, with most respondents believing the sector is not in a bubble.

Other key points from the report include:

• Investors’ bullish positioning on commodities is at its highest since April 2022, with a net overweight of 34%;
• A net 53% of investors are overweight on emerging market stocks, the highest since February 2021;
• Allocation to consumer discretionary stocks has fallen to its lowest since December 2022.

This Bank of America global survey was conducted from March 6 to 12, with 181 respondents managing a total of $529 billion in assets.

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Editor: He Yun