Strategists fearful of recession within six months
Results from a Natixis Investment Managers survey of 34 of its experts shows that one-quarter believe recession is inevitable while 64% see recession as a distinct possibility over the next six months.
The mid-year survey of 34 market strategists, portfolio managers, research analysts and economists at Natixis Investment Managers and 15 of its affiliated investment managers, also showed nine in 10 believed central bank policy would be the biggest market driver over the next six months.
Katy Kaminski, chief research strategist and portfolio manager, AlphaSimplex Group LLC, said: “10 years of over-reliance on easy money led to significant outperformance for growth equities. That’s over for the foreseeable future.
“The biggest market driver at the end of 2022 will be central banks and bringing down inflation to lower the longer-term cost of capital.”
Inflation was at the top of the list of concerns from the experts, with seven in 10 ranking it as the biggest market risk for the second half of the year.
Central banks also factored into the picture with 52% citing their policy decisions as a key inflation driver. Another 46% also believed that the supply chain issues that helped drive inflation early in the pandemic will continue to do so through year-end.
However, less than one in four believed inflation would remain persistently high.
Strategists also saw the potential for world events, like the Russia/Ukraine war, as key risk considerations as 65% of those surveyed placed geopolitics as a top risk and 47% saw energy prices as a significant risk for markets in H2.
The connection between energy and geopolitics was highlighted by the rising oil price where prices spiked to $120 per barrel at the outset of the war in March.
Looking ahead, nearly half of strategists (49%) anticipated WTI crude oil would end the year priced in the range of $100-$125.
Recommended for you
There is one specific risk that is a significantly higher concern for financial services directors compared to companies overall and is impacting their risk appetite, according to the AICD.
Global fund managers are shunning bonds, with the asset class seeing the largest drop in allocations in more than 20 years.
Australian Ethical has seen its funds under management reach $10 billion, driven by organic customer growth and superannuation contributions.
Financial advisers will have access to private equity investments run by WTW for the first time as it launches a pooled fund to provide savers with access to traditionally institutional assets.
