World Econ­omy in best shape since 2011, says in­vestors

The Pak Banker - - Front Page -


The world econ­omy is in its best shape in 18 months as China's prospects im­prove and the US looks likely to avoid the so-called fis­cal cliff, ac­cord­ing to the lat­est Global Poll of in­vestors.

Two-thirds of the 862 sur­veyed de­scribed the global econ­omy as ei­ther sta­ble or im­prov­ing. That's up from just over half who said that in Septem­ber and is the most since May 2011.

The US came out on top for the eighth straight quar­ter when in­vestors were asked which mar­kets will of­fer the best op­por­tu­ni­ties over the next year. China ranked sec­ond, re­vers­ing a de­cline to fourth in the Septem­ber poll of in­vestors, an­a­lysts and traders who are Bloomberg sub­scribers. The Euro­pean Union, be­set by a debt cri­sis, was seen of­fer­ing the worst re­turns.

"The global econ­omy is im­prov­ing, re­cov­er­ing and heal­ing, thanks to the U.S. and the emerg­ing mar­kets," said An­drea Guzzi, a poll re­spon­dent and vice pres­i­dent of IST In­vest­ments­tiftung fuer Per­son­alvor­sorge, which man­ages money for Swiss pen­sion funds. "More peo­ple are be­com­ing wealthy, less and less are poor."

Stocks were seen as the as­set of choice, with more than one in three of those sur­veyed on Nov. 27 fore­cast­ing eq­ui­ties would have the best re­turns in the coming year. Real es­tate came in sec­ond: Just less than one in five in­vestors sin­gled it out fa­vor­ably, the best show­ing since the quar­terly poll be­gan in July 2009. Bonds were seen as of­fer­ing the worst re­turns.

The Fed­eral Re­serve is ex­pected to pro­vide con­tin­ued sup­port to the bond mar­ket af­ter its Op­er­a­tion Twist pro­gram ends next month, ac­cord­ing to the poll. About three in four said the U.S. cen­tral bank will be­gin out­right pur­chases of Trea­sury se­cu­ri­ties af­ter its plan for swap­ping short-dated se­cu­ri­ties for longer-dated ones ex­pires.

A plu­ral­ity -- two in five - - said the Fed also will con­tinue buy­ing mort­gage-backed se­cu­ri­ties into 2014, a strat­egy dubbed QE3 by in­vestors, short­hand for the third round of quan­ti­ta­tive eas­ing by the cen­tral bank.

"The Fed is be­ing very clear about mon­e­tary pol­icy," Gala Prada, a poll re­spon­dent and port­fo­lio and as­set man­ager for Fiatc Mu­tua de Se­guros y Rease­guros, a Barcelon­abased in­surance com­pany, said in an e-mail. "If the econ­omy doesn't im­prove, there will be a QE4 or more as­set pur­chases."

The grow­ing op­ti­mism among in­vestors about the world econ­omy was not re­flected in their views of the prospects for the fi­nan­cial ser­vices in­dus­try. About seven in ten said they ex­pect large banks to re­duce pay­rolls fur­ther in the next year af­ter cut­ting at least 188,000 jobs over the last two years.

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