Fund Managers Shunning Japan Equities: Merrill Survey

London, Feb. 18 (Jiji Press)--Fund managers are sharply reducing
their exposure to Japanese equities, a February survey by Merrill Lynch
showed Wednesday.
Of the 212 fund managers polled, a net 26 pct are underweight on
Japanese shares, up from 15 pct in the January survey. Meanwhile, fund
managers' enthusiasm for U.S. equities grew, with a net 15 pct now
overweight, up from 7 pct in the previous month.
Michael Hartnett, chief global emerging markets equity strategist
at Banc of America Securities-Merrill Lynch, said, "There's a less
compelling reason to be in Japan."
Money was allocated to Japan over the past 12 to 13 months as
investors hoped that the yen's strength would offset the weakness of the
nation's equity market.
But now the yen is perceived to be overvalued, it is unlikely to
strengthen much further. Japan thus "goes back to being a play on the global
economy," Hartnett said. According to the survey, a net 34 pct of the
respondents believe that the yen is overvalued.
The survey showed that 90 pct of the respondents believe that the
world is in recession. But only a net 6 pct think the global economy will
weaken over the coming year, a marked improvement from the net 24 pct who in
January expected to see further deterioration.
The improved expectations apparently derive from hopes on the
Chinese economy.
Hartnett said China is "the one place in the world where policy
seems to be working." He noted that there is "less currency risk in China
than other emerging markets."