Despite a year of geopolitical shocks, investors in Europe are growing more optimistic about stock market returns in 2017, with particular rise in optimism for emerging markets and public equities, and increased appetite for alternative strategies, according to a survey by J.P. Morgan Private Bank.
Compared to the Private Client Survey released in May, optimism about stock market returns has been on the rise, with 39% expecting public equities to be the best performing asset class over the next 12 months. Twenty eight percent of investors were optimistic about alternative strategies.
Only 9% were optimistic about cash, while fixed income appealed to only 7%.
The study further revealed investor’s decreasing concern towards geopolitical events, and their preoccupation with policy or economic risks for markets.
A quarter of clients cited state central bank policy divergence as the biggest risk for the coming year; followed closely by low inflation or deflation.
Nearly one-fifth (18%) of the respondents cited Donald Trump’s victory in the US presidential election as a concern, while 16% cited potential European slowdown after Brexit as concern.
Across Europe, investors in Switzerland were the least concerned about the result of the US presidential election, while investors in Sweden were the least concerned about Brexit’s effect on the economy.
The study also highlighted investors’ rising optimism about emerging markets, with 30% expecting emerging markets to have an economic rebound over the next 12 months.
UK investors were the most optimistic about emerging markets, followed by investors in Germany.
Investors were also optimistic about the strength of the US dollar, with 50% expecting the currency to be the strongest performing over the next 12 months.
Almost a quarter (24%) of investors believed gold to be the strongest performer in 2017. Sterling, euro, and Japanese yen, were expected to be the strongest performing currency next year by 12%, 8%, and 6% of investors, respectively.