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Even after rout, less than 10% of investors consider EM cheap: survey
[LONDON] Even after the steep decline that has rocked global markets this year, fewer than 10 per cent of investors consider emerging market-related assets cheap, according to a Barclays survey of more than 700 global investors.
Chinese stocks have plunged 40 per cent in the last three months, oil has sunk to its lowest in six years and many emerging market currencies have fallen to their weakest since the 1997-98 Asian crisis, some to their lowest on record.
But according to Barclays, more than half of the 716 global investors surveyed said these assets are still expensive, and fewer than 10 per cent said they are cheap.
"Most investors expect further downside in China-linked assets," Barclays said in a survey published late on Monday.
Forty-five per cent of those polled said the August selloff was part of an ongoing correction in China-related assets, just over a quarter think the correction will be "short-lived and healthy", while 30 per cent say it marks the start of a wider malaise in risky assets.
More than 40 per cent of investors said weak growth in China and emerging markets is the biggest risk for global financial markets over the next 12 months, and almost 40 per cent think the economic and financial risks in China are to the downside.
The "vast majority" of respondents reckon Chinese growth statistics are probably overstated. Of those, more than 60 per cent say by 2 percentage points or more.
Close to half of those surveyed attach at least a 25 per cent probability to China experiencing some sort of financial accident over the next two years, up from a third of respondents earlier this year.
Globally, deflation is now more of a risk than inflation, according to 75 per cent of those surveyed. And after several quarters of an upbeat growth outlook, the upside and downside risks are now equal, the survey said.
Despite the gloomier outlook, most investors remained generally bullish on equities, with 45 per cent saying they remained the best-performing asset class over the next three months.