Financial professionals are optimistic that global stocks will rebound enough in the second half of the year to reduce the unprecedented losses seen so far.
The S&P 500’s losses for this year are forecast to come back from the lows of -34% seen in the first few weeks of the Covid-19 pandemic to post a loss of -7%, a study of 2,700 global investment professionals found.
The MSCI World Index is expected to see losses of 7.3% by the end of 2020, meaning expectations are for a more modest decline like that seen in 2018 rather than in 2008 when the S&P plunged 37% and the MSCI posted a loss of over 40%.
Over half of respondents to the Natixis Investment Managers survey saw initial volatility caused by the coronavirus crisis as driven more by sentiment than by fundamentals. They are more optimistic about recovery in the US than the rest of the world, while in the UK market expectations are in line with the global average.
Levels of pessimism were found to be highest in Asia, where double-digit losses are forecast for the year overall.
Across the board, financial professionals’ main concern is the uncertainty of what happens next, including how investors handle it.
Darren Pilbeam, managing director, UK retail and wholesale sales at Natixis IM, said: “With economies slowly reopening, financial advisors around the world are bullish on recovery, but they are also focused on how to shield clients from the volatility they expect to come with it.
“The crisis has been a perfect storm for emotional investment decision-making, and with the downturn exposing the limitations of passive investing, the vast majority of advisors are looking to active management in the current environment.”
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