Wed, 18/12/2013 - 14:08
Investment professionals worldwide report greater optimism over economic prospects for the coming year, although those in Asia Pacific (APAC) tend to be more cautious, according to the CFA Institute.
The findings of the institute’s 2014 Global Market Sentiment Survey (GMSS), drawn from 6,561 members surveyed worldwide, show that 63 per cent expect the global economy to expand, up from 40 per cent in last year's survey.
Most optimistic are members in the UK (78 per cent) and Brazil (74 per cent), while those in Hong Kong and mainland China are the least (54 per cent and 48 per cent respectively).
In India, optimism about the global economy has grown significantly with 56 per cent predicting an expansion, up from 38 per cent a year ago. Indian members are even more upbeat about their local market. Six in 10 (61 per cent) respondents here expect India's economy to expand in 2014. Within APAC, only Japan (73 per cent) is more positive. However, concerns about political instability may affect the outlook. An overwhelming eight in 10 (78 per cent) cite this as the biggest risk to the local economy -- the highest among the major markets surveyed. Most other markets cite weak economic conditions or emerging market growth rates as the top threat to their domestic economies.
When asked what impact certain other events would have on the local economy, responses from India are also among the most pronounced. Almost all (96 per cent) feel that effects on energy prices caused by unrest in the Middle East will have a negative impact. More Indian respondents also believe that progress of recovery in Europe would have a positive impact (85 per cent), to a much greater degree than they believe progress of recovery in China (56 per cent) or even domestic political stability (58 per cent) would.
"India heads into a general election next year so that is likely why concerns over domestic political instability feature so prominently," says Navneet Munot, a director of the advocacy committee and board member of the Indian Association of Investment Professionals (IAIP), a member society of CFA Institute. "Our interest in Europe's recovery and the impact of unrest in the Middle East on energy prices also reflect how our economy is intrinsically linked to developments in these two regions.”
Indian members are also significantly concerned about the lack of ethical culture within financial firms, with 62 per cent identifying that as the main factor causing the current lack of trust in the finance industry. Only Switzerland (71 per cent) and Singapore (63 per cent) are more critical. Respondents in India say that to improve investor trust and confidence, the top two actions firms need to undertake are: an improved culture established and encouraged by top management (36 per cent); adherence to ethical codes and standards (37 per cent).
"The number of members who expect the global economy to expand has nearly doubled in the last two years, however this is no time for those in finance to become complacent," says John Rogers, president and CEO of CFA Institute. "The survey reflects that investor trust has been eroded and in order for the financial industry to be an extraordinary force for good, we must embrace ethical behaviour at all levels. As markets rebound, we are working to ensure that attention does not shift away from meaningful reforms that might restore investor trust and strengthen the financial system's ability to resist shocks in the future."
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