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IPE August 2017 Expectations Indicator: Managers shift on Japan

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The biggest changes in asset managers’ expectations for different markets last month were reserved for Japan, according to IPE’s August Expectations Indicator.

Every month IPE polls asset managers on their six to 12-month views on regional equities, global bonds, and currency pairs.

In July, the sample of 89 investment managers turned positive on Japanese equities for the first time in several months, with 65% predicting a rise, up from 57% the month before. The last time there was a positive shift was in March.

Belief in dollar strength continued to fade, with the biggest change in sentiment – a 10 percentage point decline – registered in managers’ outlook for the greenback to rise versus the yen. There was a corresponding increase in those expecting stability in the dollar’s relationship with the yen.

The trend for more asset managers to adopt a bullish to neutral outlook for sterling bonds came to a halt last month. For the first time in several months, there was an increase in the share of managers expecting prices to fall. After a six percentage point increase, this is now narrowly the majority view (52%).

Asset managers were most bearish on euro bonds, with 68% expecting a fall in price, up from 64% the previous month. There was a small increase – three percentage points – in negative sentiment on euro-zone equities, although this is the equity market managers were most upbeat about.

 

 

 

EquitiesUSEuro-zoneJapanAsiaUK
% predicting rise (previous month)30 (29)74 (74) 65 (57) 52 (51)27 (25) 
% predicting stability (previous month)50 (52)20 (23)26 (35)38 (41) 54 (57) 
% predicting fall (previous month)20 (19)6 (3)9 (8)10 (8)19 (18) 

expectations indicator graph key

aug 2017 expectations indicator equities 1

 

aug 2017 expectations indicator equities 2

aug 2017 expectations indicator equities 3

 

 Bond prices $ ¥ £ €
% predicting rise (previous month) 10 (10) 4 (6)8 (7)  10 (8)
% predicting stability (previous month) 25 (26) 61 (62)40 (47) 22 (28)
% predicting fall (previous month) 65 (64) 35 (32) 52 (46) 68 (64)

aug 2017 expectations indicator bonds 1

aug 2017 expectations indicator bonds 2

 Currencies $/€ $/¥ $/£
% predicting rise (previous month) 34 (32)36 (46) 36 (41) 
% predicting stability (previous month) 41 (46)46 (39) 48 (41) 
% predicting fall (previous month) 25 (22)18 (15)  16 (18)

aug 2017 expectations indicator currencies 1

aug 2017 expectations indicator currencies 2

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