Investors' growth expectations look to be 'double-dipping', with optimism on the Chinese economy at its lowest since January 2009 and expectations on global growth and corporate profits at their lowest since March 2009, according to Bank of America Merrill Lynch's fund manager survey for June.

But there seems to be a mismatch between outlook and portfolio positioning on China. Despite their pessimism on the Chinese economy, fewer global emerging-market (GEM) managers are underweight the country than last month (a net 7%, compared to a net 43% in May). And among Asia-Pacific ex-Japan investors, China is the biggest overweight after Indonesia.

GEM is once more the favoured sector among global investors, with a net 31% of investors overweight emerging-market equities, up from 19% last month.

Asia, however, is not particularly favoured, with a net number of investors underweight most Asian countries in the survey -- only Indonesia and Thailand are recording a net number of investors overweight, while Russia and Turkey are the most popular emerging markets.

Australia's mining tax has hit Asia-Pacific investor positions in the country, with the net number of investors underweight Australia almost doubling from 13% to 24%.

Energy stocks, too, have suffered -- presumably due to the oil spill in the Gulf of Mexico. Only a net 7% of global asset allocators are overweight the sector, compared to 37% in May -- the biggest monthly swing in energy the survey has recorded.

Meanwhile, investors are displaying greater concern about market liquidity conditions with 42% of the panel describing liquidity as "poor", up from 22% in April. Broadly, however, risk appetite remains steady -- average cash balances fell slightly to 4.1% of portfolios from 4.3% in May.

Inflation fears are plummeting, with 80% of respondents now ruling out a US Fed rate rise in 2010. The survey also suggests that investors can see buying opportunities beckoning with a net 38% of the panel saying equities are undervalued, the highest reading since March 2009.

Negative sentiment from global investors towards Europe, at its worst in May's survey, appears to have bottomed out. Global investors are feeling more hopeful about the outlook for Europe's stocks and for the euro. June's survey shows that 19% of the global panel is predicting the euro to appreciate over the coming year, up from 7% in May.

Meanwhile investors' love-affair with the dollar has cooled. Investors are neutral about the greenback's value, a month after a net 29% had viewed it as undervalued.

The BoA Merrill survey was conducted from June 4 to 10, and a total of 293 panellists participated -- 207 participants with $606 billion in AUM took part in the global survey and 170 with $411 billion AUM in the regional (Europe and EM) surveys.