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May 05, 2020

Investors positive on long-term economic recovery

More than half of Asian investors cautiously optimistic about their region’s short-term economic outlook, finds survey

US investors’ short-term optimism in their economic outlook dropped sharply in the first quarter of 2020, while more than half of Asian investors are cautiously upbeat about their region’s short-term economic condition, according to a survey conducted by global financial services firm UBS between April 1 and April 20.

North American investors’ level of optimism was one of the lowest in Q1, ranking second-lowest globally as the US emerged as the epicenter of the global pandemic. Less than one third (30 percent) of survey respondents are optimistic about the economic prospect of their region, a plunge of 38 percentage points from the pre-pandemic views of the last quarter of 2019. 

Source: UBS

Source: UBS

In a study of 2,928 investors around the world with at least $1 mn in investable assets, Swiss investors are the most concerned about the short-term economic outlook of their region. Only 28 percent of the respondents were optimistic about the economic performance in Q1 2020, falling 19 percentage points compared with expectations in the last quarter of 2019. 

The findings appear to indicate that investors’ public health concerns are spilling over into the economic performance potential of Switzerland. The country has topped the list of Covid-19 cases per capita, with 1,340 cases per million people by the end of the first quarter this year.

On the other side of the world, Asian investors are the most hopeful about their region’s short-term economic outlook, with 55 percent expressing optimism, ranking the highest globally. Even so, Asian investors’ short-term optimism in Q1 is down 16 percentage points on the previous quarter. 

Globally, investor optimism over the short-term economic outlook has fallen 20 percentage points in the first quarter compared with the last quarter of 2019, and now stands at 40 percent. A further 15 percent of investors remain neutral, while 45 percent express strong concerns over short-term economic performance.

Long-term investment prospects
The study notes that despite pessimism for the short term, the majority of investors around the world are upbeat about economic prospects for the long term. 

Seventy percent of respondents globally are optimistic about the long-term economy, slightly exceeding the 69 percent who felt the same way in the last quarter of 2019. Levels of pessimism were lower in the first quarter this year than in Q4 last year.

Despite investors’ growing fears of recession in the next 12 months – up by 21 percentage points on the previous quarter – only 16 percent plan to decrease their portfolio. Almost half (47 percent) of investors polled do not plan to adjust their portfolio, while 37 percent intend to invest more.  

When it comes to risks, the top three concerns for investors worldwide are the pandemic (57 percent), a market downturn (46 percent) and regional politics (44 percent).

Sixty percent of respondents will wait until stocks fall further in value – by an anticipated 5 percent to 20 percent – before investing more, while 23 percent view this as a good time to buy stocks. A further 16 percent of the respondents are cautious about taking steps in response to the current bear market.