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Washington - International investors are the most bullish on stocks in at least 3½ years, with close to two-thirds planning to raise their holdings of equities during the next six months, according to a Bloomberg survey.
As the global financial and business elite gather in Davos for their annual forum, 53 percent of respondents to the Bloomberg Global Poll also say equities will offer the highest return in the next year. That's a 17 percentage point jump from the last poll in November and the most since the quarterly survey of investors, analysts and traders who subscribe to Bloomberg began in July 2009.
Behind the enthusiasm for shares: growing confidence in the U.S. economy and ebbing concerns about Europe. America is in its best shape in two years, according to the poll, with a majority of the 921 surveyed on Jan. 17 describing the economy as improving. In a sign the euro-area's three-year debt crisis is easing, only 45 percent said the region's economy is still deteriorating, down from seven in 10 two months ago.
"There does appear to be some cautious optimism that things are slowly being resolved," Ben Kelly, an equity analyst at Louis Capital Markets in London and a poll participant, said in an email. "There are some positive shoots that people are grabbing on to."
The signs of greater confidence in the economic and equity outlook lend an upbeat tone to this week's five-day gathering in Davos, Switzerland, of 2,500 executives, policymakers, investors and academics.
"There's a great sense of relief we dodged a lot of bullets in 2012 - we didn't go off the fiscal cliff in the U.S., Europe didn't have a meltdown and China didn't have a hard landing," said Nariman Behravesh, chief economist at IHS Inc. in Lexington, Mass., who will be in Davos. "There are definitely pockets of good news with recoveries in North America and parts of Asia gathering momentum."
U.S. economic activity picked up across much of the country last month, boosted by automobile and home sales, the Federal Reserve said on Jan. 16 in its Beige Book survey of business conditions.
The improvement in the U.S. is having a "positive effect throughout the world," according to Sriram Srinivasan, chief executive officer of Wall Street Investment Management in Chantilly, Va., and a poll respondent.
The global economy is in its best shape since May 2011, according to the survey, with 35 percent of those contacted saying it is getting better. That's about twice the number who say the outlook is worsening. European investors were the most upbeat; U.S. respondents the least.
"The positive wealth effect caused by rising stock markets creates a big global confidence boost," Srinivasan said in an email.
Equity market gains are expected to be widespread. More than three-in-five surveyed forecast the Standard & Poor's 500 Index and the MSCI Asia Pacific Index will be higher six months from now. The U.S. index closed at a five-year high of 1,485.98 in New York on Jan. 18 and the Asian gauge rose 0.3 percent Tuesday as of 3:57 p.m. in Tokyo.
Perceptions about Japan's prospects have brightened considerably following the election of Shinzo Abe as prime minister last month. Abe has pledged to revitalize the Japanese economy through both fiscal and monetary means, a program generally viewed optimistically by 54 percent of respondents.