US equity sentiment on the wane
At the time of EIE’s preparatory research trip in February, Danish fund selectors had Europe’s most bullish views on equities in general. Though EU equity sentiment has slipped slightly since, it is still very robust. But US equity appetite has fallen significantly. Only 43% of attending delegates will increase allocation during the coming twelve months, down from 60% only two months ago.
Central banks do the trick
The event’s speakers still see plenty upside for stocks on the long term, thanks to supportive central bank policies. “The message from the central banks is to buy equities and to take risk. They will not let interest rates go up and have been pretty reliable in printing money”, said Michael Strobæk, chief investment officer of Credit Suisse. Moreover, the ‘Great Rotation’ from bonds to equities has not yet taken off according to Strobæk, providing even more reason to continue allocating additional money to equities.
Russia and small caps recommended
Emerging market equity sentiment is on the rise in Denmark too. 40% of attending delegates will increase exposure to the asset class during the next twelve months, compared to less than a third in February. According to the panellists, emerging market bulls are right. Three of five speakers mentioned the asset class when asked by chair Jeroen Vetter to name their favourite investment opportunity. Most speakers mentioned Russia as one of the most attractive bets at the moment. “Russia was already cheap before the Crimea-crisis, so it is even cheaper now”, UBS equity specialist Kevin Barker told the audience.
But global small caps are the best category to go for right now, according to Barker. “Valuations are still reasonable, and earnings will typically accelerate on the back of growing economies.” Danish delegates indeed have a clear preference for small caps in Europe (see graph).
EMD sentiment up
Danish fund selector sentiment towards emerging market debt is turning and firmly back in positive territory. 29% will increase their holdings of emerging market government bonds, with only 9% decreasing their exposure. Denmark’s fund buyers are even more positive about EM credit. Almost four out of ten will step up their allocation, while only 6% will decrease. On the other hand, appetite for high yield bonds has decreased sharply since February. The number of Danish delegates increasing their exposure came down from 40% in February to 26% now.
Click here to see a slideshow of photos taken at Expert Investor Denmark.
Platinum members can additionally view a full breakdown of the event voting data here.
