A vast majority, 86%, of the 800 institutional investors and corporate executives surveyed for BNY Mellon believe there are significant opportunities for stock market growth. However, 58% think there are major downside risks preventing them from taking advantage of those opportunities, the survey, conducted by the Economic Intelligence Unit, found.
“The survey shows that while a strong consensus among global investors has emerged on opportunities for growth, uncertainty caused by political, social and economic factors has led to inactivity and maintaining the status quo across a meaningful percentage of the investor base,” said James Palermo, vice president and CEO of global client management at BNY Mellon.
Investors believe emerging markets offer the best prospects for growth, particularly Brazil, India and China. However, two-thirds think that some emerging markets nations could be overheating, and nearly half think investors are pinning too much hope on emerging markets.
The next best-performing sector investors pointed to was commodities, with oil, gas, agriculture, agribusiness, mining and metals seen as the sectors offering the best potential. That said, like the view on emerging markets, investors said commodities will be the asset class where levels of risk are most likely to increase over the next 12 months.
Investors also expect the global economy recovery to continue, but just over half think the recovery will slow over the next 12 months. BNY Mellon said this is likely due to the political unrest in the Middle East and the earthquake in Japan.
A majority said the default of a Eurozone country is looking increasingly likely, but they do not expect this to result in the break-up of the European Union.