Bubble concerns trigger shift in investment choices
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Risky markets
China, the world's fastest-growing major economy, is viewed as a bubble by 62 percent. About one-third of respondents said China offered the best investment opportunities over the coming year, almost tied for first place with the US and Brazil, though down sharply from October, when 44 percent ranked China best.
This time, almost three out of 10 investors said China posed the greatest downside risk, ranking it the second-riskiest market behind the European Union.
"We think that China is producing and is building up inventories at a rate that no other country or region can follow at the moment," said poll respondent Alcibiades Angelakis, head of marketing and research at EPIC Investments in Athens. "This cannot continue for a long time, and we fear that in the second half of this year things will slow down."
The quarterly Bloomberg Global Poll of investors, traders and analysts in six continents was conducted on Jan 19. It is based on interviews with a random sample of 873 Bloomberg subscribers, representing decision makers in markets, finance and economics. The poll has a margin of error of plus or minus 3.3 percentage points. Overall, market professionals in the poll are increasingly confident in the global economy, with a 43 percent plurality now viewing the international economic outlook as improving, up from 37 percent in October. The optimism cuts across all regions, with respondents in Asia, Europe and the US alike saying the global situation is getting better.
The prospect of a strengthening global economy is reflected in poll respondents' market analyses. Stocks are considered the most promising asset class over the coming year, followed closely by commodities. Bonds are judged likely to have the worst returns over the same period. Over the next six months, oil, copper, corn and soybean prices all are expected to rise.
Sovereign default
The risks this year in Europe are related to the potential of a sovereign default debt in the region "that could fully blow into a crisis that can impact the currency, equity and fixed-income markets," said poll respondent Sivanesan Muthusamy, a senior vice-president in funding and investments at Alliance Bank in Kuala Lumpur.
More than three-quarters of respondents believe a government debt default is likely this year, with 30 percent saying it is very likely.
Six of 10 rate Greece's sovereign bonds highly risky. Behind Greece, Argentina's government bonds were rated highly risky by 42 percent, followed by Russia, 34 percent; Ireland, 32 percent; Portugal, 28 percent; Italy, 21 percent; Spain, 20 percent; and Mexico, 19 percent. Only 3 percent rated US Treasury bonds highly risky.
