Separate reports published by Ernst & Young and Towers Watson examining global investor confidence suggest that there is cause for cautious optimism, even as the global economy struggles to overcome the downturn.
In its influential survey of global fund managers, Towers Watson found that “guarded optimism has returned”, with the report stating that “institutional investors’ are expected to either modestly increase risk or keep their portfolio risk level the same in 2013”. Nevertheless the report did find that investors believe that global growth will remain sluggish as we head deeper into 2013 and medium-term government bonds troubled.
The survey found that managers expect improved equity returns in most markets except the US and Australia. And while equity volatility remains relatively high when compared with longer-term averages, it has improved on levels seen during the financial crisis. The report found that growth in the US and Chinese markets appear to be the major drivers of optimism, with Europe still mired in the downturn and emerging economies less quick to respond to improving global economic conditions.
A survey of the IPO market by Ernst & Young found investors similarly buoyant about prospects in 2013. The number of institutional investors buying pre-IPO and IPO stock leapt in 2012 to 82 percent, up from only 18 percent in 2010-2011 and the market appears bullish about 2013.
According to the report: “investors cite the prospect of a brighter corporate earnings outlook, an improving macro-economic environment and more stable equity markets as the key drivers of sustained positive market sentiment through 2013.”
It seems that there may yet to cause for cautious investor optimism in 2013.
Ernst & Young, Towers Watson, investment, asset management