LONDON British investors reduced their equity holdings and sought safety in cash in January, a Reuters poll showed on Friday, after nearly $8 trillion was wiped off global stock markets at the start of the year.
Asset managers cut their overall equity holdings by 3.5 percentage points to 49.7 percent, the lowest since September 2015, and raised their cash from 5.5 percent to 10.1 percent, the highest level since June.
The poll was conducted between Jan. 15-27, a period in which stock markets were in freefall, notching up one of their worst Januarys on record. This prompted some investors to run for cover and sit out the volatility on the sidelines.
Peter Lowman, chief investment officer at Investment Quoram, said equity markets had been driven by panic and anxiety as worries over the collapse in the oil price, the perceived Chinese economic slowdown, and fears of a further slump in global growth took their toll.
Whilst these issues aren't expected to go away in the near term, with equities now officially in bear market territory Lowman thought the time was right for investors to buy quality stocks at much cheaper levels.
"We see many opportunities ... as pockets of deep value appear around the world - this is definitely a stock-picker's market," he said.
Within their global equity portfolios, British managers showed a strong preference for their home market, raising their UK allocation by six percentage points to 32.9 percent, the biggest weighting ever.
They cut their U.S. equity holdings by two percentage points to 26.2 percent, with some saying the U.S. bull run was over. The S&P 500 has been on a rising trend since 2009 but ended 2015 flat and is down almost 8 percent in 2016.
"The best opportunity is in large cap, value stocks - but timing this decision is a devil of a job. Catching falling knives is a dangerous game," said Rob Pemberton, investment director at HFM Columbus.
Emerging markets continued to divide managers, with some like Pemberton remaining wary. But Thomas Becket, chief investment officer at Psigma Investment Management said certain markets now looked very appealing due to extremely depressed valuations.
Within their fixed income portfolios, managers cut their U.S. and UK bond holdings by between six and eight percentage points and added to eurozone and Japanese bond holdings, with both the European Central Bank and the Bank of Japan still in easing mode.
(Editing by Jeremy Gaunt)