The findings were made at the latest quarterly UBS Cyclical Market Forum, attended by asset managers from the US and across Europe.
The general consensus was that a “risk-on” atmosphere would prevail over the next six to 12 months and, Europe aside, the global economic outlook was reasonable. Almost half of attendees indicated that they expected European markets to remain volatile.
Curt Custard, head of global investment solutions, said: “It’s remarkable how US-based investors are so much more bullish than their European counterparts. The regional split seems to matter even more than the traditional different viewpoints between stock and bond investors.
"Even fixed income investors—not always the most bullish group—based in the US are far more optimistic about the world as a whole than equity investors based in London and other parts of Europe.”
Europe not out of the woods
Speaking at a news conference last week, Mario Draghi, president of the European Central Bank, said the European economy remains vulnerable to downside risks, weakening domestic demand and insufficient implementation of structural reforms in the euro area. All of these factors, he said, could dampen the improvement in confidence and delay the recovery.
In the UK many fund managers remain cautious about the economic outlook for Europe. In its global economic outlook paper, Threadneedle forecast the Eurozone economy to contract 0.5% over the course of 2013, 0.3 percentage points below the general consensus, and predicts that the crisis will persist although break-up risks will abate.
In terms of asset allocation, EU equities were put in its “dislike” category, as was the euro in terms of FX allocations. It is more confident in terms of UK equities, which are among its favoured holdings alongside emerging markets and Pacific excluding Japan equities.
Speaking at a briefing this morning, Mark Burgress, CIO, said: “Europe is likely to stay in recession and added to this, debt burden issues will further impact on investor confidence. Austerity will drag, and interest rates will remain low indefinitely.”
Despite the gloomy outlook, there were shoots of hope earlier in the year when the State Street Investor Confidence Index showed a modest increase in European investor confidence.
