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US election replaces trade war as biggest concern for markets, BofA survey finds

The outcome of the U.S. presidential election in 2020 has replaced global trade conflicts as the biggest market concern among fund managers, according to a Bank of America Corp. global survey published Jan. 21.

Results of the survey showed that 29% of fund managers consider the presidential election outcome the top "tail risk" for markets, while 22% said trade conflicts remain the biggest risk.

Bank of America Global Research said it was the first time since May 2019 that trade concerns have not held the top spot on fund managers' list of issues that could unnerve markets.

Apart from trade conflicts, other top concerns since 2011 have included eurozone sovereign debt, China's economic growth, political populism, and quantitative tightening, according to Bank of America Global Research.

The latest survey was conducted Jan. 9-16, a period that included the signing of a "phase one" trade deal between the U.S. and China. A total of 249 panelists representing $739 billion in assets under management participated in the survey.

The survey found that a net 36% of fund managers the highest level since February 2018 expect global growth to improve over the next 12 months. Nineteen percent believe that the global economy will log above-trend growth and below-trend inflation, while 62% continue to expect below-trend growth and inflation.

Global corporate profit expectations also surged to the highest since March 2018, with a net 27% of respondents projecting an improvement in profits over the next 12 months.