European fund managers are increasingly optimistic about the resilience of the US economy, according to the latest European Fund Manager Survey. The survey reveals that 62% of respondents believe the US economy will remain resilient, a significant increase from the 28% reported the previous month. This growing confidence in the US economy comes as growth pessimism in Europe remains notable, with 62% of respondents expecting a weaker European economy due to monetary tightening. However, this represents a decline from the 83% who held this view last month [62a393ed].
Despite concerns about the European economy, the survey indicates a growing optimism for European equities. A total of 78% of participants see potential for upside in European equities over the next twelve months. Furthermore, 46% of investors expect further upside for European cyclicals, while 35% anticipate further downside for European value stocks compared to growth stocks [62a393ed].
Investors are placing their bets on European consumer stocks as economic confidence grows in Europe. This trend is reflected in the Bank of Japan ending the era of negative interest rates, Deloitte launching its biggest reorganization in a decade to cut costs, and Unilever's plans to split off its ice cream business and cut 7,500 jobs. European investment banks are also cutting bonuses after a deal drought. Additionally, Bill Gates' TerraPower is planning to build the first US next-generation nuclear plant, and an Abu Dhabi fund is offering to buy out investors fleeing China private equity. Nelson Peltz has expressed concerns about Joe Biden's 'mental condition' and will vote for Donald Trump [f75b30de].
UK wealth manager Hargreaves Lansdown has announced that investor confidence in European, North American, and Japanese assets is climbing steadily. The poll of its clients as part of its monthly Investor Confidence survey for February shows the index has stayed the same overall but shows variation in geographical sectors. Confidence has risen in the European, Japanese, and North American sectors but has fallen in the Asia Pacific sector and stayed the same for Emerging Markets and the UK. Momentum and rallying markets are clearly moving client views, HL said. Economic uncertainty will create market volatility, but markets are forward-looking and the expectations of falling inflation, and in time, falling interest rates have provided a boost to stock markets. [ff28656a].
The US has topped the 2024 Kearney FDI confidence index for the 12th consecutive year, with Canada maintaining its second rank. China jumped from seventh position to third, while Japan dropped from third to seventh. Developed markets accounted for 17 of the 25 markets on the index, but emerging markets like the United Arab Emirates and Saudi Arabia are rising in the rankings. The US economy's strength and rebounding consumer sentiment likely supported its top ranking. China's rise can be attributed to its loosening of capital controls for foreign investors, while Japan's drop reflects its economic woes. The Americas has the most markets on the list with nine, followed by Asia Pacific at seven, the Middle East and Africa at five, and Europe at four. Southeast Asia continues to show strength, with Thailand, Malaysia, Indonesia, and the Philippines among the top 15. Investors anticipate an increase in geopolitical tensions and a more restrictive business regulatory environment in both developed and emerging markets. They also expect to make significant or moderate use of artificial intelligence in their business operations and decision-making. [ddf641ad]