Will the recent rally in global stock markets end in a crash soon? According to a survey by Oppenheimer Israel, the end of the rally is still far off. Most of the investment institutions which participated in the survey believe that equities will be the most attractive investment instrument in 2014, European stock markets will produce the highest returns, the US Federal Reserve's quantitative easing will be reduced (or even ended), and that the yields on US T-bills will rise. The less good news is that 18% of respondents believe that the biggest bubble in international markets is Israeli real estate.
Oppenheimer published the survey at its international analysts' conference on Sunday. 100 local investment institutions participated in the survey. 73% of the respondents said that equities would continue to be the most profitable investment instrument, with a wide margin over other instruments. For the sake of comparison, corporate bonds and gold were ranked in second and third place, each cited by 6% of the respondents.
In addition, 50% of the respondents believe that technology is the most attractive sector in the US stock market in 2014. It is followed by the financial sector (38% of respondents) and manufacturing (23%). However, only 20% of the respondents believe that the US stock market will have the highest return in 2014, compared with 50% of the respondents who believe that European markets will have the highest return. "The Eurozone today looks much better than a year ago," says Oppenheimer Israel European equity analyst Nir Hatzav, "At the same time, the risk perception for the European economy has fallen."
Many of the respondents (39%) believe that high-yield corporate bonds will give investors the highest return. Unexpectedly, however, 30% of the respondents believe that, in 2014, no bond instrument will be attractive. Nonetheless, 65% of the respondents believe that the yield on US T-Bills will rise. "Even if prices fall, the loss in bond markets is limited. On the other hand, losses in stock markets are almost unlimited," says Oppenheimer Israel senior fixed income analyst Avihay Sorezcky.
76% of the respondents believe that the Fed's quantitative easing will be reduced or ended during 2014, while 16% believe that this will happen in 2015. 5% of the respondents believe that the Fed's quantitative easing will not be halted.
What about the risks ahead? Opinion is divided. 33% of the respondents believe that the main risk in financial markets will be the result of a slowdown in China or emerging markets. However, 32% of the respondents believe that the risk will come from changes in monetary policy by the world's central banks, and 15% believe that the biggest threat is a fiscal crisis in the US, and 8% fear a crisis in the Eurozone.
The title "the biggest bubble in the capital markets" was won by bonds, which was the choice of 55% of the respondents. 20% cited the social networks sectors, and 18% said that it was the Israeli real estate market.
60% of the respondents believe that the shekel-dollar exchange rate will be NIS 3.50-4/$ in 12 months, and 33% believe that it will be NIS 3-3.50/$.
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2013
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