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So said Merrill Lynch’s equity strategist Karen Olney at the bank’s monthly fund manager briefing on Wednesday. “Not all balance sheets are created equal,” she added.

Investors, according to the August survey which wrapped up last Thursday amid market panic, still see value in equities, with a net 11 per cent of managers regarding equities as undervalued. In fact, in contrast to gloomy predictions from analysts and the media, only 7 per cent foresee a global recession in the next 12 months.

“Investors seem to be viewing this turmoil as a potential buying opportunity for equities,” says David Bowers, independent consultant to Merrill Lynch. “You don’t get the sense that people have thrown in the towel.”

The explanation, he says, is our old friend,  “decoupling” - investors still believe that the rest of the world can decouple from a US slowdown. Faith in decoupling has boosted enthusiasm for emerging markets stocks, say Merrill. A number of strategists, including those at Morgan Stanley, have argued that the emerging markets are now in a position to withstand a US slowdown.

The emerging markets now almost seem to represent a safe haven from the turmoil, says Bowers. In August, the Merrill survey showed a notable shift towards the emerging markets at the expense of US equities.

For Olnay, the increased volatility and credit difficulties are certainly creating opportunities. “The confusion over value is creating value,” she says, of European equities. “European equity markets are valued in line with the 25 year history, and we don’t think bull markets end at a level where there is no exuberance in the valuations.”

Just be picky. For one, she’s still steering well clear of the banks. European financials fell 6 per cent in the panic at the end of last week losing €275bn in value.

But watch the underlying story, she adds. “Until the underlying asset behind this whole issue of subprime mortgages and overly-aggressive financial vehicles, that’s housing, sees some light at the end of the tunnel this will be a slow-burning story.”

Or in other words, more bad news to come.