According to Bank of America's survey of global fund managers, betting on the rising Chinese stock market is considered one of the most crowded positions.

Investors' views on the Chinese stock market have undergone a dramatic change. According to the latest survey by BofA for the week ending in late October, about 14% of investors believe that betting on the Chinese stock market is one of the most crowded positions in the global market, on par with the 'Magnificent Seven' of the US stock market and gold positions. This survey reflects a rapid change in people's emotions.

China's announced stimulus measures have surprised most investors. 48% of respondents expect the Chinese economy to strengthen in the coming months, the most optimistic level since April 2023.

Cautiously optimistic sentiment best explains the improved market sentiment. About 31% of Asian investors indicated that due to gradual signs of policy relaxation, they are looking to increase investments in China, compared to only 8% previously.

33% of respondents stated that they are either in a wait-and-see mode or seeking to sell during the rebound. BofA's Asian clients also believe that the recent sharp rise in the Chinese stock market has limited further upside in the short term. When asked about the upside potential in the next six months, nearly half (47%) of respondents indicated that the upside potential is 10% or below. However, investors view this as a short-term trading opportunity rather than a long-term turning point.

Globally, due to the Fed's interest rate cut, China's stimulus commitment, and expectations of a soft landing for the US economy, global investors' optimism in October reached its highest increase since June 2020.

The survey shows that the cash allocation ratio decreased from 4.2% in September to 3.9%, with a net increase of 31% in stock allocation, while the bond allocation ratio hit a record low with a net decrease of 15%.

Investors expect the upcoming US elections to most likely impact trade policy (47%), followed by geopolitics (15%) and taxes (11%).

Regarding how investors are pricing in the concept of a soft landing, the survey shows that the increase in global stock allocation is the highest since June 2020.

However, according to the bank's own indicators, the sharp decline in cash levels triggered the first reverse 'sell signal' since June last year. The bank stated: 'Since 2011, there have been 11 sell signals triggered, with global stock markets returning -2.5% in the following month and -0.8% in the following 3 months.'

$iShares MSCI ACWI ETF (ACWI.US)$ It has risen by 0.6% so far in October, approaching the sixth consecutive month of gains.

This survey was conducted from October 4th to October 10th, with a total of 231 experts participating, managing assets worth $574 billion.

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