Last updated: 16:07 / Tuesday, 26 January 2016
Northern Trust´s Survey

EM Slowdown and Earnings; Manager´s Top Concerns

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EM Slowdown and Earnings; Manager´s Top Concerns
  • A slowdown in emerging markets, U.S. corporate earnings and U.S. economic slowing ranked as the top three concerns among investment managers polled in Northern Trust´s fourth-quarter 2015 survey
  • Only 21% of managers view U.S. equities as undervalued and they are most bullish on non-U.S. developed equities.Emerging market equities ranked second
  • Within economic sectors, information technology and financials ranked first and second in bullishness
  • Two-thirds of managers expect little to no impact on global equity markets from the Fed’s interest-rate increase

A slowdown in emerging markets, U.S. corporate earnings and U.S. economic slowing ranked as the top three concerns among investment managers polled in Northern Trust´s fourth-quarter 2015 survey. Fewer managers than in the past expect U.S. economic activity and corporate earnings to accelerate, a developing trend Christopher Vella, CIO, and Mark Meisel, SVP, Northern Trust Multi-Manager Investments, noted last quarter that continued this quarter. A large percentage of managers expect U.S. economic activity to remain stable, yet a small but increasing segment of managers expect a period of deceleration.

The study shows that only 21% of managers view U.S. equities as undervalued, down from 34% last quarter and the lowest percentage since the survey began in the third quarter 2008. Investment managers view the valuation of European equities in the best light, with approximately 85% rating them as either undervalued (54%) or appropriately valued (32%). Investment managers are most bullish on non-U.S. developed equities. Emerging market equities ranked second. Within economic sectors, information technology and financials ranked first and second in bullishness.

The results also show that two-thirds of managers expect little to no impact on global equity markets from the Fed’s interest-rate increase; If the price of oil remains low for another year, only 25% of managers believe it will be negative for the U.S equity market; 84% of managers believe the probability of a global recession due to a slowdown in emerging markets is 25% or lower;
 Only 23% of managers expect corporate earnings to increase, the lowest reading in this survey since the first quarter 2009; A large percentage of managers, 64%, expect U.S. GDP growth to remain the same, but only 23% versus 48% last year expect GDP to accelerate; 41% of investment managers view U.S. equities as overvalued, the largest percentage of managers since the survey began in the third quarter 2008. 


 

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