| Investors see slowdown spill into '09 | |
| Press Trust Of India / New York November 21, 2008, 0:46 IST | |
With the financial turmoil ravaging economies globally, four out of five investors feel the world will continue to be gripped by recession over the coming year, despite the injection of billions of dollars by various governments, says a survey.
The fund managers’ survey conducted by financial services provider Merrill Lynch in November showed that investors are still unconvinced that a slew of measures including monetary policy initiatives can help in combating the “global recession”.
“Four out of five investors believe that the world will continue to experience recession over the coming year. Policy makers have offered fiscal stimulus packages, liquidity and interest rate cuts, but investors are not yet ready to give their policies benefit of doubt,” the report noted.
Further, investors are looking to American equities, where the outlook for corporate profits is the “most favourable”. About 36 per cent of the people surveyed are overweight on US equities whereas asset allocators are underweight on European and Asian stock markets.
“Investors remain embedded in a defensive asset allocation mindset. Many acknowledge the global policy response seen in recent weeks, but the fear of deflation may be keeping them on the sidelines,” said Gary Baker, head of EMEA equity strategy at Merrill Lynch.
“This could start to look risky as determination of government fiscal responses allied to further monetary easing starts to play through into sector preferences,” Baker added.
A total of 180 fund managers participated in the global survey carried out from November 7 to 13, managing $536 billion. Further, 149 managers participated in the regional surveys, managing $334 billion.
Though 85 per cent of those surveyed expect the Chinese economy to weaken, the country is preferred by investors to any other emerging markets.
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