ANNOUNCEMENT: Expert Investor is now PA Europe. Read more.

Economic recovery expectations split

With half saying equity markets have become out of sync with the real economy

Over three-quarters of respondents to a survey conducted by the CFA Institute think that the global economic recovery post-covid will follow a steady path or be K-shaped.

The survey, which was carried out in May, asked over 6,000 respondents how the sentiment about economic recovery in their markets could best be characterised.

Over four in 10 (44%) said that the recovery would be a ‘K-shape’, which the report’s authors defined as, “[…] different parts of the economy are recovering at different rates, times, or magnitudes”.

Just under a third (32%) said instead that the economy was on “a steady path”.

Fiscal stimulus

Interestingly, respondents were split on whether central banks should prioritise an exit strategy from accommodative monetary policy (51%) or not (43%).

The survey also found that the majority believe that equity markets had recovered too quickly with the aid of monetary stimulus and were now out of pace with the real economy. Respondents predicted a correction within the next one to three years.

When it comes to equities in their markets, 45% thought they had recovered too quickly, followed by 43% thinking that global developed market equities had done the same. Just 25% said similar about global emerging market equities.

There was less consensus on inflation. While nearly two-thirds (65%) believed that inflation will increase, those respondents were split between those who thought central banks would engage in restrictive policy (34%) or raise interest rates (31%). Conversely, a fifth thought that there would be no significant inflationary pressures manifesting within the next one-to-three years.

Inflation is currently a hot topic, with few agreeing on whether we are about to enter a period of high inflation. A recent survey of fund managers by Bank of America found that 93% expected higher inflation in the next year. But others, including Nadege Dufosse, global head of multi-asset at Candriam Asset Management, have said that any inflation bumps will only be for the short term.

Respondents to the CFA Institute’s study were largely from the US (2,504 of 6,040) and had been in the industry for more than 20 years. Over a third worked for asset management or investment firms. The company size of respondents was split fairly evenly between small, medium, and large institutions. The largest proportion (16%) of individual respondents were portfolio managers.

  • Can M&A and buybacks breathe life into UK market?

    Can M&A and buybacks breathe life into UK market?

    Both buybacks and M&A should help realise value in UK shares, boosting prices and giving investors another reason to consider the UK stockmarket Not only does M&A activity appear to be picking up, with a high-profile bid for UK electronics retailer Currys, but the scale of company buybacks continues to accelerate. If it goes well,…

  • Capital Group launches multi-thematic Article 8 funds

    Capital Group launches multi-thematic Article 8 funds

    Capital Group has launched a set of multi-thematic sustainable funds that are available for investors in Europe, writes Christian Mayes. The Capital Group Sustainable Global Opportunities fund (LUX) will invest in global equities, while the Capital Group Sustainable Global Corporate Bond fund (LUX) will target fixed income exposure. The launch also includes a multi-asset offering…

  • Bond funds pull in €29.7bn in January – LSEG

    Bond funds pull in €29.7bn in January – LSEG

    Bond products were the best-selling asset class in January, according to LSEG Lipper’s European Fund Flow report, writes Christian Mayes. The asset class pulled in a net €29.7bn in the month, while Money Market USD grouping was the best-selling Lipper Classification after receiving €11.2bn inflows. Providers of mutual funds pulled in €22.5bn, while passives saw net…

  • Quarter of Article 8 funds at risk of greenwashing – MainStreet Partners

    Quarter of Article 8 funds at risk of greenwashing – MainStreet Partners

    A quarter of all Article 8 funds could be accused of greenwashing based on their sustainability framework and practices, according to MainStreet Partners, writes Christian Mayes The 24% of funds classified as a greenwashing risk by the 2024 ESG Barometer report marks a four percentage point increase from the 20% flagged at the end of…

  • EU green rules could stymie decarbonisation projects – ExxonMobil

    EU green rules could stymie decarbonisation projects – ExxonMobil

    The European Union’s climate regulations may lead to it halting its investments in Europe, ExxonMobil has warned. Speaking to the Financial Times, Karen McKee, president of the product solutions division, said the oil and gas giant had struggled to begin decarbonisation projects in Europe due to the regulatory burden. The result, she added, was that…

  • ICE flags need for Europe to double green investment

    ICE flags need for Europe to double green investment

    Investments to modernise energy and transport must double by the end of the decade to reach 2030 climate targets, the EU has been warned. According to the Institute for Climate Economics (ICE), which has released the European Climate Investment Deficit report, the bloc lacks what it calls a “consistent tool” to ensure monitoring of the…