Bitcoin, US tech stocks considered to be the market’s biggest bubbles – investor surveys

LONDON (Reuters) – There is growing angst among investors about financial market price bubbles, and at the top of the list of concerns were bitcoin and US technology cryptocurrency stocks, two closely followed surveys showed Tuesday.

FILE PICTURE: Bitcoin virtual currency representation is seen in front of a stock graph in this photo taken November 19, 2020. REUTERS / Dado Ruvic

According to nearly 90% of respondents in Deutsche Bank’s money manager monthly study, many price bubbles were now bursting. The most extreme though is bitcoin, with nearly half of those surveyed seeing it at a maximum of 10 on a 1-10 bubble scale.

More generally, too, when asked specifically about the 12-month fate of bitcoin – which increased by 300% last year – and the electric vehicle maker Tesla which rose nearly 750% and is considered emblematic of high-tech stocks their price, the majority of respondents said. they were now more likely to halve than double in value.

A similar Bank of America (BofA) survey showed that the purchase of bitcoin had replaced buying technology stocks as the trade that fund managers considered most overpriced, knocking technology off the top for the first time since October 2019 and i ‘ r second position.

The cryptocoin hit an all-time high of $ 40,000 earlier this month, after rallying more than 900% since its lowest in March and just breaking $ 20,000 in mid-December.

Investors were bullish on the outlook for world growth, with the proportion of BofA surveyed fund managers who said the global economy in an early cycle, rather than a recession, was at its highest in 11 years.

A record 92% expected higher global inflation over the next year, though a Deutsche Bank poll also shows that 71% expect the US Federal Reserve to resist the temptation to start removing the impetus that is helped rally markets.

The biggest tail risks that could upset markets in the BofA study found vaccine delivery problems (30%), if the Fed tightened its asset purchases (29%) and Wall Street bubble burst (18%).

For a graphic on the surge of Global stock valuations:

Yet, although fund managers were wary of the bubbles, they did not yet abandon them.

BofA said that 19% of investors – who control over $ 500 billion in total – currently carry more risk than usual in their investment portfolios.

For a graphic on Risk:

A steeper yield curve – usually where longer-dated borrowing costs rise on expectations that economic growth will allow official interest rates to rise – has always been 83% of BofA investors.

That’s more than after the collapse of Lehman Brothers in 2008, the 2013 US Federal Reserve “Tantrum Taper” or after the 2016 US election.

For a graphic on BofA:

Elsewhere, the UK’s underground equity saw some money flowing in. But at 15% underweight, it was still pinned as the most underweight region, a BofA survey showed.

Reporting by Elizabeth Howcroft and Marc Jones; edited by Thyagaraju Adinarayan and Bernadette Baum