NEW YORK & LONDON, Jul 17, 2012 (BUSINESS WIRE) -- Investor confidence has weakened further, led

by a sharp decline in expectations of corporate profit growth, according to the BofA Merrill Lynch Survey of Fund Managers for July.

BofA Merrill Lynch's Growth Expectations Composite has fallen to 37 in July from 43 in June and 54 in May. A severely deteriorating outlook for profits is driving the fall in confidence. A net 38 percent of investors say corporate profits will worsen in the coming 12 months - compared with a net 19 percent a month ago. It represents a 39 percentage point drop since May. The two-month drop is similar to the fall in confidence in summer 2011 as the sovereign debt crisis took shape.

Belief that corporates can grow profits by 10 percent or more is at its lowest point since April 2009. A net 69 percent of the panel expects corporates profit growth to be less than 10 percent in the coming year. A net 58 percent says operating margins will decrease, up from a net 41 percent in June.

Both the broader macro-economic outlook and risk appetite have stabilized, however, after two months of sharp deterioration. A net 13 percent of the panel says that the world economy will weaken in the coming year, a drop of two percentage points after a fall of 26 points from May to June. BofA Merrill Lynch's Composite Indicator for Risk and Liquidity rose slightly month-on-month as investors reduced average cash holdings in portfolios to under 5 percent. Most investors expect further quantitative easing, but few expect this to happen in the third quarter.

"July's survey highlights that corporate profit expectations have to catch up with the downgrade in the economic outlook we have seen the past two months," said Gary Baker, head of European Equities strategy at BofA Merrill Lynch Global Research. "Rising equity prices have failed to lift investor gloom and we still see a quarter of investors expecting a global recession while hopes for further policy easing have been delayed," said Michael Hartnett, chief Global Equity strategist at BofA Merrill Lynch Global Research.

Eurozone concerns spread to core economies

Investors' perception of risk in the eurozone has shifted this month with fears falling about the periphery but rising about Europe's core. The proportion of respondents who see the risk of a negative shock around Germany's economy has more than tripled to 32 percent, up from 10 percent in June. Concern about France has risen with a majority of investors (55 percent) believing the French economy could present a negative surprise this year.

Fears that Spain or Portugal could spring a negative surprise have fallen, while expectation of good news from Ireland is growing - 32 percent of investors hope for a positive surprise from Ireland this year, up from 16 percent in June. Confidence in Greece has fallen, however. The proportion saying Greece will avoid exiting the euro fell to 37 percent from 44 percent.

European investors see an increasing risk of recession and also concur with rising worldwide concerns about corporate profits. A net 61 percent of European Regional Survey panelists predict worsening corporate earnings, double June's reading.

Is the technology bubble bursting?

Technology has been a favorite sector for global investors for the past three years, but U.S. investors have signaled a possible bursting of the IT bubble. Overall, a net 22 percent of U.S. respondents to the Regional Survey are overweight technology - a sharp fall from a net 41 percent a month ago. Within those figures, 19 percent of the panel are underweight IT, up from 9 percent in June.

Global investors have also scaled back Technology holdings. A net 32 percent is overweight technology this month, down from a net 41 percent in June.

U.S. equities have declined in popularity as global asset allocators have cast their net around the world. A net 14 percent of respondents are overweight U.S. equities, down from a net 31 percent last month. At the same time, asset allocators have reduced their underweights in eurozone, U.K. and Japanese equities.

Oil and gold valuation verdicts intrigue

Despite commodities as an asset class losing popularity this month, investors see gold as fairly valued and oil as undervalued. The proportion of panelists saying gold is overvalued fell from 10 percent to 1 percent. A net 12 percent say that oil is undervalued, compared with it being viewed as fairly valued in June. The last time gold was seen as fairly valued was when it was priced at about $1,000 per ounce. The last time oil was seen as undervalued preceded a surge in the oil price.

Survey of Fund Managers

An overall total of 261 panelists with US$708 billion of assets under management participated in the survey from 6 July to 12 July. A total of 190 managers, managing US$567 billion, participated in the global survey. A total of 145 managers, managing US$323 billion, participated in the regional surveys. The survey was conducted by BofA Merrill Lynch Research with the help of market research company TNS. Through its international network in more than 50 countries, TNS provides market information services in over 80 countries to national and multi-national organizations. It is ranked as the fourthlargest market information group in the world.

BofA Merrill Lynch Global Research

The BofA Merrill Lynch Global Research franchise covers more than 3,300 stocks and 880 credits globally and ranks in the top tier in many external surveys. Most recently, the group was named Top Global Research Firm of 2011 by Institutional Investor magazine; No. 1 in the 2012 Institutional Investor All-Asia survey for the second consecutive year; and No. 2 in the 2012 Institutional Investor All-China, All-Europe and All-Japan surveys. The group was also named No. 2 in the inaugural 2012 Institutional Investor Emerging Markets Equity and Fixed Income survey, covering Emerging Europe, Middle East and Africa; No. 2 in the 2011 All-Latin America and All-America Equity team surveys; and No. 3 in the 2011 Institutional Investor All-America Fixed Income and All-Brazil Research team surveys.

Additionally, BofA Merrill Lynch Global Research was named the No. 1 Global Broker by Financial Times/StarMine, as well as ranking No. 1 in the U.S. and Europe and No. 2 in Asia. The group was also named No. 1 in Asia and No. 2 in the U.S. in the Wall Street Journal Best on the Street 2012 Analysts Surveys. The group was also the winner of the Emerging Markets magazine's EM Research Global Award for 2010 and 2011.

Bank of America

Bank of America is one of the world's largest financial institutions, serving individual consumers, smalland middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 57 million consumer and small business relationships with approximately 5,700 retail banking offices and approximately 17,250 ATMs and award-winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock /quotes/zigman/190927/quotes/nls/bac BAC-2.62% is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation ("Investment Banking Affiliates"), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is a registered broker-dealer and a member of FINRA and SIPC, and, in other jurisdictions, locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed.

For more Bank of America news, visit the Bank of America newsroom.

www.bankofamerica.com

SOURCE: Bank of America

NEW YORK Global Custodian magazine announced the results of its annual Prime Brokerage survey, with Bank of America Merrill Lynch receiving No. 1 ratings in six key categories, up from two last year. The results of the survey demonstrate the strength of the firms global franchise with top rankings achieved in key markets around the globe.

Major strengths identified by Bank of America Merrill Lynch clients include the Global Capital Introductions team, where the firm received a No. 1 rating in the survey for the third consecutive year, and the overall enterprise value that Bank of America Merrill Lynch delivers. Additional top honors include a No. 1 ranking for the third consecutive year in Europe, No. 1 in Asia ex-Japan, No. 1 in Australia, and No. 1 in Latin America.* Additional highlights of the survey include: 127 Best in Class awards this year, versus 106 last year (19.8 percent improvement). No. 2 ranking in Financing and Margining. No. 3 ranking in Hedge Fund Consulting. Prime brokers receiving 30 or more responses were eligible for awards from five different categories of clients, sized by assets (less than $100 million; $100 million - $1 billion; $1 5 billion; $5 - 10 billion; and more than $10 billion) and two client strategy categories (single or multi-strategy). Bank of America Merrill Lynch received a No. 3 rating in the following three client categories: $1 - 5 billion $10 billion+ Multi-strategy Global Custodian is a leading publication covering international financial services and has become the benchmark used by the industry for rating prime brokerages.

*Rankings calculated based on Global Custodian reported category scores for the top nine prime brokerage service providers.

Bank of America Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 56 million consumer and small business relationships with approximately 5,600 retail banking offices and approximately 16,200 ATMs and award-winning online banking with 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. Bank of America Merrill Lynch is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment

banking affiliates of Bank of America Corporation (Investment Banking Affiliates), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is a registered broker-dealer and a member of FINRA and SIPC, and, in other jurisdictions, locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed. For more Bank of America news, visit the Bank of America newsroom. www.bankofamerica.com