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Global fund managers said the euro was cheap and they were seeking more exposure to it and European equities on the back of a massive fiscal stimulus plan, a Bank of America survey showed on Tuesday.

Among factors boosting European assets is Europe’s relative success in gradually reopening its economy and the European Union’s proposed €750-billion ($1.2-trillion) recovery fund to help countries deal with the fallout from the coronavirus crisis.

Investors’ allocation to euro zone equities increased nine percentage point to net 16 per cent overweight, the largest increase in net weighting of any region this month. A net 44 per cent of the 210 investors surveyed between June 2 to 9 said the euro was cheap.

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The survey also showed a rush to the resilient U.S. technology stocks was gathering more pace in July with a record 74 per cent of investors calling it the most “crowded trade.”

The Nasdaq index, home to the world’s largest tech stocks, has been setting record highs even as COVID-19 has been spreading fast in the United States.

Although risk assets had been rising since the record sell-off in March, “sentiment remains cautious” with cash levels rising to 4.9 per cent from 4.7 per cent, BofA added.

“Wall Street’s $24-trillion rally yet to elicit ‘greed.’ ”

The bank said it expects stock markets to remain choppy during summer, recommending selling when the S&P 500 goes above 3,250 points and buying when it falls below 2,950.

Investors saw a coronavirus second wave as the biggest “tail risk” for the fourth month running with just 14 per cent of them expecting a “V”-shaped economic recovery versus 44 per cent expecting a “U,” and 30 per cent predicting a “W”.

A V-shaped recovery is when a plunge in growth is followed by an equally sharp recovery; U-shaped is when recovery takes more than a couple of quarters; and W-shaped refers to a double-dip in growth.

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