12 December 2019
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NN Investment Partners has published the results of an Investor Sentiment survey, which suggests an improvement in the outlook for emerging market and UK equities.
Some 67% of respondents were positvie on EM equities, against 51% at the same time last year. NN IP Multi Asset strategists put this down to factors including prospects for a trade deal between the US and China. However, they also warned that the asset class faces continued challenges, such as unrest and protests in Hong Kong spreading elsewhere, inability to turn an interim trade deal into a permanent one, and weaker currencies limiting the scope for monetary eawsing.
Regarding UK equities, the survey found 46% o respondents raking the asset class highly for risk adjusted returns. NN IP described this as "surprising" in light of uncertainties linked to Brexit.
Patrick Moonen, principal strategist Multi Asset, said: "A possible explanation for investors favouring UK equities could be their current valuations, or it could be because investors are hoping for a big fiscal stimulus. There are some good value opportunities given depressed stock valuations, but we retain a neutral stance on the UK in our asset allocation, as the tail risk of a hard Brexit at end-2020 remains an overhang."
The survey found that the eurozone and Japan are the least preferred equity regions. Just 36% of respondents ranked the eurozone highly, and just 31% Japan.
Ewout van Schaick, head of Multi Asset at NN IP, said: "While Japan seems unloved by investors, it ticks all the value boxes and is undergoing structural reforms that support profitability and shareholder value creation. We also overweight the Eurozone on the potential for fiscal stimulus, which would be a real game changer."
