Economic woes in Greece have now taken a backseat to concerns of a Chinese recession, according to the latest monthly poll of global fund managers conducted by Bank of America Merrill Lynch.

Fifty-two percent of the respondents, who collectively manage $575 billion worth of assets, said the greatest potential investment risk is the possibility of a recession in China. And when asked if the global economy will strengthen in the coming year, 53 percent said it would, which is down from 61 percent in the prior July survey.

Those polled also said they were allocating fewer investments in equities from emerging markets while also reducing their exposure in the energy sector. By region, the investors said they were still bullish on Europe. When it comes to an interest rate hike, a higher number of respondents expect the Federal Reserve to raise rates in the third quarter.

A rate hike is expected to have an initial negative impact on U.S. equities as it means greater costs to companies. For the retail sector, higher rates means higher credit card terms, which could soften consumer spending. Still, disposable income is expected to stay on its modest upward trajectory. For now, though, China is of growing concern.

“Investors are sending a clear message that they are positioned for lower growth in China and emerging markets,” said Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch Global Research.

James Barty, head of European equity strategy at Bank of America Merrill Lynch, added that “European stocks remain in favor — but investors like domestically focused names and are avoiding anything exposed to China or commodities.”

Some of the U.S. public companies with the greatest exposure include Yum! Brands Inc., Broadcom Corp. and Wynn Resorts Ltd. Companies in the retail, fashion apparel, luxury and beauty segments with direct sales in China had taken hits to their stocks over the past few weeks after the country devalued the yuan, but most have since recovered.

In a prior WWD report, Ravi Thakran, managing partner of L Capital Asia, a LVMH Moët Hennessy Louis Vuitton-backed fund, said he expected no impact on the Chinese luxury consumer market.

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