Fund managers are turning bullish on global markets, shifting billions into European stocks and Chinese investments as they bet on undervaluations and market rebounds.
Contents
European Stocks Back in Favor
A Bank of America survey of 200 European fund managers overseeing $482 billion reveals a major sentiment shift:
- 38% now see European stocks as undervalued—the highest in six years.
- Fund managers have moved from a 25% “underweight” position in December to 12% “overweight” in February 2025.
- The Stoxx Europe 600 index is up nearly 10% in 2025, outpacing the S&P 500’s 4% gain.
Hedge Funds Betting on China
Despite ongoing U.S.-China trade tensions, global hedge funds are buying back into Chinese markets, seeing opportunity where others see risk.
- Firms like Mount Lucas and Saba Capital are increasing exposure, betting on undervaluations.
- Some funds anticipate a policy shift or trade resolution that could boost Chinese markets.
Market Outlook: Cautious Optimism
- Tech continues to drive gains—the MSCI All Country World Index is climbing, but European stocks are leading global markets so far this year.
- Bonds and defensive stocks are also seeing inflows, signaling that some managers are still hedging against volatility.
- The European Central Bank is expected to cut rates, adding further momentum.
Bottom Line
Big investors aren’t chasing hype—they’re making calculated bets on undervalued assets in Europe and China. The optimism is measured but real, with a clear shift in where the smart money is moving in 2025.
