Bullishness makes a comeback as investors predict growth

The first buy-side surveys of 2017 – from Corbin Perception and Bank of America Merrill Lynch (BofAML) – show investor optimism and expectations of global growth.

Corbin Perception’s Inside the Buy-side’s latest report notes that 85 percent of 101 investors surveyed ‒ globally managing more than $719 bn in assets ‒ expect Q4 earnings to be in line with or better than consensus. The number expecting worse-than consensus results has dropped to the lowest level in 12 months. 

US recession fears are off the table, according to the study, with 67 percent of investors saying they feel better about the US economy post-election, while 70 percent expect the US economy to improve over the next six months. 

BofAML’s January fund manager survey shows similar findings, with expectations of global growth hitting a two-year high. 

‘The three most commonly cited tail risks are trade war/protectionism (29 percent), US policy error (24 percent) and China foreign exchange devaluation (15 percent),’ note the survey authors, while Corbin Perception also says investors are ‘downbeat on Mexico and China citing protectionism and trade war concerns.’

‘Ahead of the US presidential inauguration, investors were positioned for stronger growth and inflation, but were not willing to turn fully bullish with China-related risks on the horizon,’ says Michael Hartnett, chief investment strategist, in the BofAML press release. 

Manish Kabra, European equity quantitative strategist at BofAML, adds: ‘Fund managers have returned to Europe amid improvement in the macro outlook, but the UK remains the most underweighted region.’