Stock Bulls Increase as Economy, Bank Profits Spur Confidence

By Eric Martin and Alexis Xydias

April 15 (Bloomberg) -- Investors in 10 countries grew less concerned that stocks will keep falling, the first unanimous improvement in Bloomberg’s Professional Global Confidence Survey since it began 17 months ago, after equities posted their steepest increase since April 2003.

Participants turned bullish on Japan’s Nikkei 225 Stock Average, Brazil’s Bovespa Index, Mexico’s Bolsa and Italy’s S&P/MIB, predicting gains in the next six months. They became less bearish in the U.S., France, Germany, Spain, Switzerland and the U.K. The 1,214 responses between April 6 and April 10 followed the biggest monthly rally for the MSCI World Index in six years.

Global stocks rebounded from the lowest levels in more than a decade on speculation $12.8 trillion in spending pledged by the U.S. government and Federal Reserve will end the first simultaneous recessions in the U.S., Europe and Japan since World War II. The MSCI World Index of 23 developed nations added 7.2 percent in March, boosted when the three biggest U.S. banks said they made money in the first two months of the year.

“The market is anticipating some sort of economic recovery,” said Carlos Sanchez, a Madrid-based trader at Interdin Bolsa, a member of the Madrid stock exchange since 1998. “The indications we’ve been getting from financial firms about the start of the year have been encouraging,” said Sanchez, who participated in the survey.

U.S. Rebound

Confidence in the U.S. rebounded from March, when investors were the most pessimistic on the Standard & Poor’s 500 Index since it entered a bear market in July. The gauge increased 47 percent, the most since the survey began, to 43.43. Anything above 50 indicates investors expect stocks to rise in the next six months, while readings below 50 mean they anticipate a retreat.

The S&P 500 jumped 27 percent from a 12-year low on March 9 through last week, the steepest five-week rally since 1933, after New York-based Citigroup Inc. and JPMorgan Chase & Co. and Bank of America Corp. in Charlotte, North Carolina, said they were profitable at the start of 2009. Treasury Secretary Timothy Geithner spurred a 7.1 percent advance, the fourth-biggest gain since the 1930s, on March 23 after announcing a plan to finance as much as $1 trillion in purchases of illiquid real-estate assets from banks.

Mexico was the only country where investors’ outlook improved more than in the U.S., soaring 75 percent to 58.91. The Bolsa climbed 23 percent since the start of March after the central bank cut its key lending rate more than forecast by economists.

Raised Rating

JPMorgan last month raised Mexico stocks to “overweight” from “neutral” among emerging markets on expectations a strengthening peso will allow the central bank to keep reducing borrowing costs. Ben Laidler, JPMorgan’s head of Latin America equity strategy, advised buying shares of America Movil SAB, Grupo Televisa SAB and Wal-Mart de Mexico SAB, all based in Mexico City, because of their “resilient” cash flows.

Investors turned positive on Japan’s Nikkei amid speculation the government would use public money to support the nation’s equity market. Prime Minister Taro Aso unveiled a record 15.4 trillion yen ($153 billion) stimulus package on April 10. The Nikkei has fallen 1.3 percent this year. The survey index in Japan increased 44 percent to 53.33.

Conviction that Brazil’s stocks will advance climbed 34 percent to 56.37 and the measure for Italian stocks added 29 percent to 57.81. Respondents also grew less convinced that the Swiss Market Index and Germany’s DAX will fall. Switzerland’s reading rose 15 percent to 41.67, while the German confidence gauge added 21 percent to 40.

French, Spanish and U.K. investors became less bearish. The reading in France climbed 27 percent to 45.64, while it increased 23 percent to 36.07 in Spain and 26 percent to 37.25 in the U.K.

To contact the reporters on this story: Eric Martin in New York at emartin21@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net.