LONDON - Big investors are bracing for this summer's stock market rout to run into the autumn, fearing a broader wave of selling will follow the turmoil sparked by U.S. recession concerns and the Bank of Japan wrong-footing currency speculators.
The buy-the-dip mentality, where investors typically respond to selloffs by making recovery bets, has been replaced by fear. Michael Kelly, head of multi-asset at PineBridge Investments, which oversees around $170 billion of client funds, is among those to have reduced his funds' stock market positions and he may pull back further.A first U.S. rate cut, expected next month, might be too late to rescue the economy, he added.A weak U.S.
UBS European equity strategy head Gerry Fowler said hedge fund selling was likely over but slower moving mainstream investment managers often take four-to-six weeks to adjust their portfolios. Pension funds would also further sell equity exposure and move into fixed income, Goldman Sachs strategist Scott Rubner said in a note, adding that the second half of September has been the worst period of the year for Wall Street since 1950.Russell Investments chief U.S. investment strategist Paul Eitelman said another weak U.S. jobs report would have the potential to spark fresh volatility.