Emerging market equities are poised to extend gains into year-end, according to contrarian indicators, said Bank of America-Merrill Lynch's fund manager survey for October.
"Allocations towards emerging market stocks remain stubbornly low despite elevated Chinese growth expectations," the survey found, adding funds' high cash levels offer a contrarian signal.
It noted the current average cash balance slipped to 4.4 percent from September's 4.6 percent . But while this is its lowest in four months and below the 4.5 percent level BofA-ML generally uses as its contrarian buy signal, the bank still views cash levels as high and expects emerging markets to continue a "quiet contrarian rally."
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