Top Biz News
Bubble concerns trigger shift in investment choices
(China Daily/Agencies)
Updated: 2010-01-22 07:56
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Investors have turned bullish on the US while tempering their enthusiasm for China as they worry about a market bubble there, according to a Bloomberg survey.
An overwhelming majority also see a government debt default on the horizon this year, according to a quarterly poll of investors and analysts who are Bloomberg subscribers. Greece is considered the riskiest government, followed by Argentina, Russia, Ireland, Portugal, Italy, Spain and Mexico.
Sentiment toward the US investment climate has flipped in just three months. Almost six of 10 respondents are now optimistic about the US while a majority held a pessimistic outlook in an October poll. A nine-month rally in US stocks has pushed up the Standard & Poor's 500 Index 68 percent through Wednesday's close.
"There appears to be a surge in interest in the US, and it's in marked contrast to tepid attitudes only three months ago," said Ann Selzer, the president of Selzer & Co, the Des Moines, Iowa-based polling firm that conducted the survey.
"American consumers are regaining confidence, and with that alone, there should be no impediments for current business to resume the growth of the past decade," said poll respondent Drew Beatty, a commodity derivatives sales analyst with Wells Fargo & Co in Dallas.
The number of US investors who see their economy improving has steadily marched upward over the past two quarterly polls, more than doubling since July.
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."
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.
