Investors see China’s “hard landing” as largest financial risk

See failure of Japan’s ambitious stimulus plan as second-largest.

A new survey from Bank of America Corporation also shows that investors are returning to Europe as they retreat from emerging markets such as China and withdraw from Japanese equities.

It now identifies a hard landing for China as the greatest tail risk and more of a concern than Eurozone sovereigns or banks. A net 31% of regional fund managers expect China's economy to weaken in the next 12 months compared with a net 8% holding that view in May.

Fears that Japan's stimulus plan will fail has become investors' second-largest tail risk after China.

Tail risk is the risk of an asset or portfolio of assets moving more than three standard deviations from its current price.