Friday May 22, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Europe deflation seen by 74 pct in poll as 31 pct say markets rigged

By Rich Miller

Financial professionals are optimistic about the global economy, just not as fervent about it as they were at the start of the year. That’s the message from the latest Bloomberg Markets Global Investor Poll, which shows concern about risks ranging from the turmoil in Ukraine to the threat of deflation in Europe.

Forty percent of respondents in the survey of Bloomberg customers say the global economy is improving, another 43 percent say it’s stable, and only 12 percent say it’s deteriorating. Still, the enthusiasm has cooled: 59 percent thought the economy was improving in the last edition of the poll, in January; that was the highest reading since the world emerged from recession in 2009.

“I wouldn’t say investors are nervous, but they’re skeptical,” says Jack Ablin, who helps manage $66 billion in assets as chief investment officer of BMO Private Bank in Chicago.

The poll, conducted quarterly since late 2009, samples the opinions of traders, bankers and money managers who subscribe to the Bloomberg Professional service. Selzer & Co. of Des Moines, Iowa, collected responses from 594 customers from April 22 to 24. The poll has a margin of error of plus or minus 4 percentage points and is weighted to reflect the global distribution of Bloomberg users.

U.S. Favored

When it comes to predicting the course of economies and markets in the poll, Bloomberg customers have had some successes. They turned optimistic about the U.S. in January 2012, amid concerns about the effect on growth of a set of tax increases. They soured on the BRIC countries -- Brazil, Russia, India and China -- in early 2011, as those stock markets began to slide. They got bullish on stocks at the beginning of 2013, a year that saw the MSCI World Index rise 24 percent.

In the latest poll, appearing in the June issue of Bloomberg Markets magazine, investors view the U.S. as the world’s bright spot, with close to two-thirds describing the largest economy as improving. That jibes with the forecast of the International Monetary Fund in its World Economic Outlook in April that U.S. growth will accelerate to 2.8 percent this year and 3 percent in 2015, up from 1.9 percent last year.

On the question of which one or two markets offer the best investment opportunities over the next 12 months, the U.S. comes out on top, with 44 percent. Investors continue to endorse the recovery in the European Union, which is in second place, at 32 percent. That’s a far cry from the low of 7 percent for the region in November 2010, when the euro-zone sovereign-debt crisis was getting worse.

Deflation Risk

Poll respondents, however, are overwhelmingly concerned about deflation in the euro zone. About three-quarters of them say it’s a greater threat to the region than inflation. Some individual countries such as Portugal have already experienced deflation this year, and the inflation rate in the 18-nation bloc as a whole was 0.7 percent in April, which is about a third of the European Central Bank target of just under 2 percent.

One reason to like European stocks is that they’re cheap, relatively speaking, according to Russ Koesterich, chief investment strategist at New York–based BlackRock Inc., which manages $4.3 trillion in assets. “Most of the motivation is the valuation,” he says. Koesterich recognizes the growing caution the poll reveals. “People can still be overweight stocks and use the opportunity to raise a little cash, given the fact that there are some risks out there and stocks are no longer so cheap,” he says.

Japan, China

Investors are nervous about Asia’s two largest economies. There’s growing doubt about Japan’s turnaround. Only 13 percent say the country is among the best places to invest during the coming year, which is a decline from 23 percent in January and 33 percent in May 2013, when excitement about Abenomics was running high.

And poll participants say China’s economy is in its worst shape since September 2012. Nine percent say its economy is improving, while 47 percent say it’s deteriorating, and 41 percent view it as stable. Corruption and a troubled financial industry top the list of issues that investors say Chinese leaders need to address.

The one country that fares less well than China among Bloomberg customers right now is Russia. Asked to select the worst investment opportunities from among eight of the world’s large economies, 56 percent go with Russia. That’s the second- highest number for any country or region on this question since the poll was first run in October 2009.

Putin, Hollande

More than seven in 10 of those polled say Russia’s economy is weakening, and 45 percent recommend selling Russian assets in light of the conflict in Ukraine, which has prompted U.S. and EU sanctions. Seventy-five percent say they’re pessimistic about how Vladimir Putin’s policies affect the investment climate.

While investor sentiment about Putin is resoundingly bad, one leader scores even lower. France’s Francois Hollande, who has fought to boost taxes on high earners, garnered an optimistic vote of 11 percent; the figure for Putin was 15 percent. The most popular leader is Germany’s Angela Merkel, about whom 76 percent of respondents were optimistic.

Prime Minister Antonis Samaras of Greece, which sold bonds to investors in April for the first time since 2010, got a 37 percent optimistic score.

Close to one in five poll participants name U.K. markets as among the most attractive. Fueled by consumer spending and a London housing boom, Britain will grow faster than any other Group of Seven economy this year at 2.9 percent, according to the IMF.

U.K. Rebounding

“The U.K. economy is proving pretty robust,” says Andrew Sentance, a former Bank of England official who’s now a senior economic adviser to PricewaterhouseCoopers LLP. “It’s hard to find an economic indicator that looks weak.”

Equities are the asset of choice in the current edition, with 46 percent saying stocks will offer the best return over the coming year. Still, that’s down from the 53 percent who chose stocks in the January survey and is the lowest that the tally for equities has been since November 2012. Investors were clear that Internet and social media shares have climbed too far: 50 percent say they are in a bubble and another 36 percent say they are on the verge.

Poll respondents offer surprising criticism of their own industry. On a question about the fairness of various markets, 49 percent say the setting of the London interbank offered rate is rigged. Thirty-eight percent say stock trading is rigged against the average investor, versus 44 percent who say it isn’t. Asked whether a young person should pursue a career in finance, 41 percent say to do it; 36 percent say don’t do it.

Fed Tightening

One event cooling investors’ ardor for stocks -- and bonds too -- is the U.S. Federal Reserve’s curtailment of its ultraeasy monetary stance. Some three-quarters of those surveyed see the U.S. central bank raising interest rates by the end of next year. More specifically, 19 percent expect increases to start in the first quarter, and 20 percent predict the second quarter.

Bloomberg subscribers, for the most part, like what they see among the world’s leading central bankers, including Fed Chair Janet Yellen, who took office in February. Some 66 percent of poll respondents have a favorable view of her, compared with 20 percent unfavorable. Her approval rating was 60 percent in the September 2013 poll, when she was in the running for the chairman job but not yet nominated.

In Japan, Central Bank Governor Haruhiko Kuroda’s approval has eroded to 56 percent favorable from 64 percent a year earlier. Japan raised sales taxes in April for the first time in 17 years as Prime Minister Shinzo Abe pressed ahead with plans to revitalize the economy and repair the government’s finances.

Abe Fever Over

Fifty-four percent of survey respondents say they’re optimistic about the impact of Abe’s policies on investment. While that’s almost twice the percentage who are pessimistic, it matches Abe’s lowest favorable rating since he became prime minister in December 2012.

“Expectations were too high for Abenomics among global investors,” says Shuichi Obata, a Tokyo-based senior economist at Nomura Securities Co. “There won’t be anything that will reinstitute Abe fever. The Abenomics festival is already over.”

So as the cheers for Japan’s turnaround fade, the enthusiasm for the U.S. and Europe persists in the Bloomberg Markets Global Investor Poll -- even if investors have taken it down a notch from three months earlier.

[Bloomberg]

ekathimerini.com , Monday May 12, 2014 (09:21)  
Schaeuble said to raise possibility of Greek parallel currency
IMF participation in Greek debt talks ´essential,´ German ministry says
Frigoglass bonds surge on plan to sell glass unit to reduce debt
Greece submerges as crisis fallout worse than emerging markets
N17 convict Xeros gets more time for defense on prison breakout plan
November 17 convict Christodoulos Xeros was on Friday given additional time, until next Thursday, to give evidence regarding his failure to return from a prison furlough last year and his al...
Civil aviation staff to hold walkout on holiday weekend
The Federation of Civil Aviation Authority Unions (OSYPA), which does not include air-traffic controllers, on Friday called a 48-hour strike for May 31 and June 1, a walkout that could cause...
Inside News
SOCCER
Four-goal Panathinaikos thrashes Asteras away
Panathinaikos thrashed Asteras at Tripoli to gain an early advantage in the race for a spot in next season’s Champions League qualifiers, as the Super League play-offs got under way on Wedne...
SOCCER
Greek Cup TV rights up in the air
The Appeals Court upheld listed Forthnet’s case against the allocation of the Greek TV rights for the Greek soccer cup in the 2013-2016 period to a Cypriot company that later resold them to ...
Inside Sports
EDUCATION
Consensus is key
The education bill that has been put forward by Greece’s leftist-led government has to be the subject of extensive public consultation. Even more importantly, it needs to be approved in Parl...
COMMENTARY
The other inequality: how the state spends our money
Growing inequality between rich and poor across the world has rightly become the focus of much investigation and analysis. The Organization for Economic Cooperation and Development underline...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Schaeuble said to raise possibility of Greek parallel currency
2. IMF participation in Greek debt talks ´essential,´ German ministry says
3. Frigoglass bonds surge on plan to sell glass unit to reduce debt
4. N17 convict Xeros gets more time for defense on prison breakout plan
5. Civil aviation staff to hold walkout on holiday weekend
6. Quake measuring 4.1 Richter strikes Ionian Sea
more news
Today
This Week
1. Merkel stamps out brief optimism on Greece after Tsipras talks
2. Lessons from Israel’s tech miracle
3. Tsipras to meet Juncker on second day of Riga summit
4. Banks will be asked to revise their restructuring plans
5. EOPYY struggles for funding, sees overdue debt rise
6. Greece sees reforms deal with lenders in next 10 days, spokesman says
Today
This Week
1. The Greek-German breakthrough that didn’t come
2. Phony dilemma
3. Greece came close to not paying IMF
4. Conspiracy madness
5. National self-awareness put to the test
6. Albanian demarche raises concerns about possible territorial claims over Greece
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.