China’s economic slowdown coupled with sinking corporate profits eroded the confidence of investors in the Merrill Lynch Bank of America monthly fund managers survey.

The survey, which polls more than 200 fund managers that have an aggregate of $610 billion of assets under management, also noted that these global investors have shifted their asset allocations out of equities while increasing their cash holdings. For retail and consumer discretionary stocks, this suggests the market volatility and sell-off will likely continue.

The analysts who conducted the poll said “a net 8 percent of fund managers see the global economy strengthening over the next 12 months – the survey’s lowest reading on this measure since 2012.” But that doesn’t necessarily mean they expect an economic collapse as “just 12 percent believe a global recession will occur in the next 12 months.”

“Investors are not yet ‘max bearish,'” said Michael Hartnett, chief investment strategist of global research at the firm. “They have yet to accept that we are already well into a normal, cyclical recession/bear market.”

The survey also revealed that respondents see the equity markets in Europe and Japan as better bets. “Investors’ bullishness towards Europe remains intact, but conviction is rooted to the floor,” said James Barty, head of European equity strategy at Merrill Lynch Bank of America.

 

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