The latest Search for Growth study revealed that 65% of investors worldwide believe increasing income disparities pose a threat to global capitalism. Some also believe developing markets may not be growing fast enough to pick up the slack left by reduced consumer spending in the developed markets.
Over 75% of investors, meanwhile, said their portfolios would be severely impacted if the much-hoped for China soft landing fails to materialise.
On-going political and fiscal issues in Europe are anticipated to lead to volatility in the market, pushing investors into the so-called “safe havens” of gold and the US, which would impact most heavily on emerging market equities.
Views from the home front
UK investors are among the most pessimistic about economic and investment prospects for the EU, and just 4% of UK investors believe the EU offers strong economic growth prospects compared with 10% and 15% of global and Western European counterparts.
UK respondents were also pessimistic about asset price growth in Europe: only 12% picked the EU for best growth prospects compared with 19% of the global investors and 28% of western European respondents.
Not all bad news
As shown in the graph, 72% of investors do anticipate seeing some kind of improvement in the economy over the coming 12 months in comparison with the previous 12 months.
US assets were cited as having the greatest prospect for growth, followed by China (42%) and South East Asia (34%). Equities, real estate and corporate bonds are perceived to be the best asset classes to invest in over the coming 12 months.
However, just over half of investors, 51%, stated they believed there were significant financial opportunities in the current market, but the downside risk was too strong for them to consider taking advantage of them.