Fund Managers bullish for emerging markets in 2011; however western markets expected to lag on most measures
Mumbai: A global survey conducted by Towers Watson, global professional services firm shows that fund managers are bullish about the prospects for public equities and emerging markets in 2011.
The survey, says the Tower Watson press release, covering 141 investment managers opines that two major risks to avoid are the likelihood of sovereign debt default in the Euro zone and continuing economic stagnation in Japan.
Further most fund managers agree that there would be increasing competitiveness from emerging economies and persistent boom conditions in China while most western economies will have a slow economic recovery.
Carl Hess, global head of investment at Towers Watson, said “Established western markets will continue to lag the emerging markets on most measures, with the Euro zone and Japan expected to have the worst headwinds, in contrast to continuing rapid growth in China and other developing markets.”
Towers Watson also found that investment managers expects equity returns to slow down over the next couple of years more than the historical average and their predictions about returns diverge widely by market. They agree on the volatility being more compared to 2010.
According to managers, anticipated returns on global equities in 2011 will be 10.0% (10.0% in 2010) with other equity markets expecting to deliver 10.0% (9.0%) in the U.S.; 10.0% (8.5%) in the U.K.; 7.0% (9.0%) in the Euro zone; 10.0% (9.0%) in Australia; 6.0% (9.0%) in Japan; and 10.5% (14.5%) in China. Expected equity volatility for 2011 is in the 17% to 22% range, somewhat higher than longer term averages.
Most managers hold overall bullish views for the next five years on emerging market equities (85% vs. 87% in 2010), public equities (79% vs. 74%), private equity (54% vs. 49%), real estate (49% vs. 43%). “A further indication of optimism is the view that all economies are expected to have moderate growth in 2011 as well as during the next ten years, supported by loose central bank monetary policies. The notable exception to moderate growth is China, where real GDP growth is expected to be around 9% this year, falling to 7.5% during the next ten,” said Carl Hess.
