Investors are the most bearish they have been on emerging-market equities for 13 years, while allocations to stocks in the US, eurozone and UK are at multi-year highs, according to Bank of America-Merrill Lynch’s fund manager survey this month.

That said, certain markets in Asia – notably China and Korea – are heavily in favour among global EM managers. Korea has gone from having a net 20% of GEM managers underweight in July to a net 42% overweight this month.

Asia-Pacific investors have made a similarly strong surge into Korean stocks, and also switched from a neutral weighting on Singapore to a 13% net overweight.

Meanwhile, China’s net overweight doubled from around 20% to over 42% among GEM investors compared with July. Asia-Pacific fund managers are less bullish on the market, switching from a net 8% overweight to a neutral weighting.

Both India and Malaysia have fallen heavily out of favour among both Asia-Pacific and GEM investors in the past month, and Indonesia retains a heavy underweight in both group’s portfolios.

Brazil saw the biggest fall in sentiment among GEM investors in the past month.

In terms of sectors, GEM fund managers significantly cut exposure to the consumer-related sectors of health care (which moved from a net overweight to underweight), staples and discretionary. By contrast, materials, tech and industrials saw a notable improvement in sentiment.

While a net 19% of global investors reported being underweight GEMs this month (the highest since November 2001), the survey indicated the third biggest overweight of US equities in 10 years and the highest exposure to eurozone and UK stocks since January 2008 and December 2002, respectively.

This may explain why a net 72% of global investors expect the global economy to strengthen – a big rise from 52% last month and the strongest reading for four years in this survey.

“While global growth expectations have risen very rapidly, the good news is that cash levels remain high [at 4.5%],” says Michael Hartnett, chief investment strategist at BoA-Merrill Lynch Global Research. “Out-of-favour emerging markets offer some enticing opportunities to deploy these balances.”

Meanwhile, sentiment towards the eurozone has improved notably. A full 88% of European fund managers now expect the region to strengthen in the year ahead, twice the level last month. Respondents increasingly view stronger growth as the likeliest solution to the eurozone debt crisis, rather than interventions by the European Central Bank.

An overall total of 229 panelists with $671 billion of AUM participated in the survey from August 2 to August 8. This included 180 managers, managing $516 billion, that took part in the global survey; and 112 managers, managing $290 billion, that participated in the regional surveys.