US & Europe – Who’s the Bull, Who’s the Bear?

(April 10, 2013) — Institutional investor attitude towards the global economic outlook depends majorly on geographic location, UBS Global Asset Management has found.

When attendees at a quarterly forum were asked to choose from three potential economic scenarios that ranged from optimistic to pessimistic, US investors were markedly more upbeat than their transatlantic peers.

Curt Custard, head of global investment solutions at UBS Global Asset Management and chair of the Cyclical Market Forum held in Chicago said it was remarkable how US-based investors were so much more bullish than their European counterparts.

“The regional split seems to matter even more than the traditional different viewpoints between stock and bond investors,” said Custard. “Even fixed income investors-not always the most bullish group-based in the US are far more optimistic about the world as a whole than equity investors based in London and other parts of Europe.”

The asset manager reported that in general, participants believed that a “risk-on” atmosphere would prevail over the next six to 12 month, but tail risks in Europe, such as the recent banking crisis in Cyprus, remained concerning.

The three scenarios were: Risk perpetuation, risk habituation, and risk annihilation. More than half of all investors opted for the first one; a third for the second; and the rest took the gloomy third option.

UBS said the previous two forums had been dominated by discussions of the US “fiscal cliff” and the potential drag on US GDP growth precipitated by severe spending cuts, but the focus of the latest quarterly meeting shifted back to the role of fundamentals in driving market returns. In general, participants foresaw a reasonable global growth outlook, with Europe a notable exception.

Responding investors were responsible for a combined £391 billion.

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