U.S. Named the Worst Destination to Invest Behind European Union and Japan
NEW YORK--(BUSINESS WIRE)--Investors say they are seeing opportunity and taking on greater risk, looking more to emerging markets such as China, Brazil and India than developed countries, a Bloomberg survey shows.
The U.S. was in fourth place behind those economies in offering the most opportunity, in the latest quarterly Bloomberg Global Poll of 1,030 investors, analysts and traders who are Bloomberg subscribers. The world’s largest economy was also named the third-worst place to invest behind the European Union and Japan. Some respondents cited the Federal Reserve move to buy $600 billion of Treasuries as cause for concern.
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Still, the largest group -- a 39 percent plurality -- was bullish on the overall economic environment. Another 25 percent said things were getting back to normal, and 35 percent said they were still hunkering down, according to the poll conducted on Nov. 8 by Selzer & Co., a Des Moines, Iowa-based firm.
Some poll respondents said the move -- known as quantitative easing because it seeks to loosen monetary policy by buying quantities of bonds rather than lowering short-term interest rates -- was giving a potentially dangerous jolt to the markets.
China was chosen by 33 percent of respondents as offering the best opportunities for investors over the next year, with Brazil second at 31 percent and India third with 29 percent. The U.S. was next with 23 percent, followed by Africa at 11 percent and Russia at 10 percent.
Brazil’s recent presidential election was seen as a positive sign by global poll respondents, with 33 percent saying Dilma Rousseff’s victory was good for investors. Twelve percent said it was bad, and 55 percent had no idea.
On the question of which markets offer the worst opportunities, 37 percent chose the European Union, with Japan coming in second at 30 percent. Twenty-four percent said the U.S. and 22 percent the U.K.
Assessments of the U.S. were divided: 32 percent of respondents said the economy is improving, while another 32 percent said it’s deteriorating. Thirty-six percent said the economy is stable.
Respondents to the Bloomberg Global Poll were more upbeat about the world economy, with 44 percent seeing improvement, 37 percent saying it was stable and 18 percent predicting deterioration.
Investors predicted stocks would offer the highest return over the next year, with commodities being the next best investment. On the flip side, 49 percent said bonds will have the worst returns, while 19 percent chose real estate.
Fifty-three percent of respondents said they were increasing their exposure to stocks over the next six months, up 9 points from the last Bloomberg survey in September. Another 42 percent said they would be investing more in commodities, an increase from 36 percent.
Respondents said major stock indexes in the U.S., Europe and Asia would all rise, with the MSCI Asian Pacific Index drawing the most votes at 64 percent. Fifty-six percent said the U.S.’s S&P 500 Index would be higher.
Two European indexes, the Euro Stoxx 50 and the FTSE, fared slightly worse with just 42 percent and 43 percent, respectively, saying they would increase. The FTSE has risen 10.4 percent over the past year, while the Euro Stoxx 50 has fallen 1.7 percent.
On government bonds, 55 percent said they would reduce their holdings. Corporate bonds were more mixed: 35 percent said they were cutting exposure while 40 percent said they would maintain their current holdings.
The investors and analysts predicted that most asset classes would rise over the next six months, with crude oil prices getting the most support at 65 percent. Gold was expected to rise by 51 percent of respondents.
Forty-nine percent said the yield on the U.S. Treasury 10- year note would be higher in six months. The yield on the 10- year note has fallen to 2.65 percent from 3.84 percent at the beginning of the year.
The poll has a margin of error of plus or minus 3.1 percentage points.
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