Regional fund managers surveyed by Merrill Lynch earlier this month have become decidedly optimistic about the economic prospects in Asia-Pacific ex-Japan, which is completely the opposite of the gloomy scenario of global fund managers over global economic growth.

A net 27% of the respondents to Merrill LynchÆs regional fund managers survey said they expect the Asia-Pacific ex-Japan economy to strengthen over the next 12 months. ThatÆs a turnaround from the net 25% who said in September that they expect the regionÆs economy to weaken.

In line with expectations of stronger economic growth, a net 20% of the respondents said the regionÆs consensus earnings per share will improve over the next 12 months. In September, a net 33% of the respondents expected EPS growth to deteriorate.

Most regional fund managers believe Asia-Pacific ex-Japan shares are either fairly valued or overvalued, which is very much in line with their cash positions. A net 25% of the respondents said they are overweight in cash, lower than the net 50% in September and the net 36% in July. In June, the respondents were more bullish over equities as a net 7% of them said they were underweight cash.

Merrill Lynch surveyed 180 regional fund managers worldwide, with combined assets under management of $458 billion. Of the total respondents, 81 manage institutional funds, 57 manage retail funds, 27 manage hedge funds, and the rest manage other types of funds.

In a broader survey of 206 global fund managers with combined assets under management of $671 million, a net 55% of the respondents expect the global economy to weaken over the next 12 months. ThatÆs more than the net 48% of the respondents who said the same thing in September.

Although the US Federal ReserveÆs easing monetary policy has helped calm stock markets worldwide, it has failed to reignite confidence in global economic and corporate profits growth, Merrill Lynch says in a report.

Despite expectations of weaker economic growth, only a net 10% of the global fund managers polled expect the global economy to slip into recession within the next 12 months.

Merrill Lynch takes the net positions of fund managers in each survey question by measuring positive responses against negative responses.