Investment professionals worldwide expect the global economy to grow an average of just two per cent in 2015, according to the CFA Institute 2015 Global Market Sentiment Survey.
Survey respondents — who include portfolio managers, research analysts, and C-suite executives — cite political risks, including secessionist and nationalistic movements, as the most underestimated risk that could negatively affect markets in the next five years.
Survey respondents expect only modest gains in equity market indices, with the TSX predicted to climb 1.5 per cent, S&P 500 predicted to climb 4.8 per cent, the EuroStoxx 50 to increase 1.9 per cent, and a 1.6 per cent rise for the Nikkei 225. Members also expressed concern about ethical issues, including market fraud and the need for improved regulation and oversight of global systemic risk to improve investor trust and market integrity.
“The survey results show low expectations from our members for global economic growth and market performance over the next year,” said Kurt Schacht, CFA, managing director, CFA Institute.
On average CFA Institute members expect the global economy to grow 2.0 per cent in 2015, while respondents in Canada expect their local GDP to grow by just 1.7 per cent. On the higher end, survey respondents expect India to see robust 5.8 per cent growth in the economy there, and members in China anticipate 6.2 per cent growth. Members in Switzerland, Japan, France, and Brazil all expect growth of less than 1 per cent in their home markets.
Canadian respondents see external economic performance as the biggest risk to local market performance. Close to half of Canadian members (45 per cent) cite weak external economies as the largest risk to Canada’s performance in 2015. Of those, 23 per cent cited weak emerging market economies as the biggest risk, while 22 per cent identified weak developed economies as the biggest risk.
Canadians cite political risks, developed market performance and demographic concerns as short- and mid-term threats to global market. Twenty-three per cent of Canadian members cited political instability as the biggest threat to global capital markets in 2015, while the same number cited the poor performance of developed markets as a leading risk.
The United States and China remain the top picks for equity market performance in the coming year, as was the case in the 2014 survey, followed this year by India and Russia.
The annual CFA Institute survey measured the opinion of 5,259 CFA charterholders and members, representing the views of professional investors around the world. The survey was conducted online from October 14 to 28.