Search for Growth Study Spotlights Investor Views on Wide Range of Global Risks and Scenarios and Their Impact on Portfolios and Businesses
Nearly three-quarters of investors expect global economic expansion in 2013, an increase of 15% compared to 2012, according to the 2013 Search for Growth survey and report, sponsored by BNY Mellon and conducted by the Economist Intelligence Unit (EIU).
While generally bullish on a global expansion this year, many investors are expecting a strong US recovery -- led by housing, manufacturing and energy. Others respondents are less sure, viewing the US as "the best of a bad bunch" of developed countries saddled with unsustainable debt, weakening infrastructure and growing income disparities. In fact, a staggering 65% of investors agree with the following statement: "Rising income disparities pose a threat to global capitalism".
Investors are also concerned about economic slowdown or overheating in emerging markets. BRIC (Brazil, Russia, India and China) economies are disappointing investors -- especially Brazil and India, which appear to have fallen out of favor with investors this year. Southeast Asia eased ahead of Brazil for the first time in the three year study, gaining the third slot in investors' preference
Key findings of the report include:
-- Investors are still bullish on China, yet they are increasingly looking
to the US and a wider range of emerging markets to bolster returns. When
investors were asked to select the three best regions for asset price
growth, 46% chose the US, 42% chose China, 34% chose South-east Asia,
30% chose Brazil and 27% chose India.
-- 57% of investors think that US manufacturing will be revived by cheaper
input costs (namely energy and labor). The overwhelming majority think
this scenario will have a positive impact on portfolios or businesses.
-- For the first time since the study launched in 2011, the US was picked
by investors as the top country for asset price growth. China topped the
list in 2011 and 2012.
-- Globally, investors are most optimistic about quick returns in sectors
such as oil and gas and agribusiness. But their bullishness on
commodities has waned since 2011. Investors in 2013 are diversifying
portfolios away from commodities and into value-added sectors such as
technology and services.
-- Investors expect the highest returns from equities this year.
Meanwhile, with sovereign debt burdens still rising across much of the
OECD, government bonds have been called into question. The survey shows
that 53% of investors expect stocks to be the strongest performing asset
class over the next 12 months.
The Search for Growth research examines the prospects for economic and market growth from the perspective of institutional investors and corporate executives. Based on a global survey of 730 respondents and a series of in-depth interviews with leading investors and experts, the report explores the potential for risk scenarios and for growth across a wide range of sectors, regions and asset classes.