Global Fund Managers Bullish On North American Equities

18 March 2011

Global Fund Managers Bullish On North American Equities, Says HSBC Survey

***More fund managers neutral towards Asia ex-Japan and Greater China equities*** ***All fund managers are positive on Asian bonds*** ***New Zealand investors should be looking for exciting new investments***

One hundred per cent of the respondents in the latest HSBC Fund Managers’ Survey are taking an overweight view towards North American equities in the first quarter of 2011, up from 25 per cent last quarter.

Global fund managers shifted away from Asia-Pacific ex-Japan equities, from 75 per cent with a positive outlook last quarter to 50 per cent in 1Q11. And 43 per cent of fund managers are neutral towards Greater China equities, up from 33 per cent in 4Q10 amidst concerns about tightening measures and credit control policies in the Mainland.

Bruno Lee, Regional Head of Wealth Management Asia-Pacific, said: “HSBC’s Fund Manager Survey shows a significant change in investor confidence. All respondents are bullish on equities, and none on bonds or cash. Fund managers are looking to North American equities because of improving economic conditions, merger and acquisition activities and encouraging company reports. At the same time, fund managers are lukewarm on Asia-Pacific ex-Japan due to concerns over rising inflation in the region, and less bullish on Greater China equities as the market takes in the impact of ongoing austerity measures to contain inflation.

“However, all fund managers surveyed turned positive towards Asian bonds in 1Q11 from 60 per cent last quarter, reflecting confidence in Asia’s economic fundamentals and the financial strength of select governments, sectors and corporate issuers in the region. Recent developments in the Middle East and Japan are expected to cause some uncertainty and market volatility, tempering the optimism in the first quarter, but the general view on long-term global economic recovery remains positive.”

Glen Tonks, Head of Wealth, at HSBC New Zealand says: "For New Zealand investors we think that you should always be looking for exciting new investments, and the emerging world has given plenty of those in the last couple of years, but in doing so, investors may have taken their eye off some of the very attractive investments that are literally sitting almost in their own backyard and across the developed world.

“Most New Zealand investors until early 2010 believed that emerging markets were all one single risky trade i.e. lumped into the same basket. The performance of emerging market bonds in the face of volatility in equities and considerable global financial and political turmoil offers evidence of the growing resilience of emerging markets generally. Once upon a time, New Zealand investors - and global investors for that matter - would withdraw all at once from all emerging market assets and currencies. It appears now they don’t,” continues Tonks.

“Finally, it’s not that we feel, structurally, that the emerging markets story is over or about to be significantly reversed. The biggest trend globally will continue to be the shift from West to East, lead by China and India in particular," continues Tonks.

ENDS