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CFA Institute - Global Market Sentiment Survey: Detailed results - January 2014
 

CFA Institute - Global Market Sentiment Survey: Detailed results - January 2014

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CFA Institute - Global Market Sentiment Survey: Detailed results - January 2014 ...

CFA Institute - Global Market Sentiment Survey: Detailed results - January 2014

CFA Institute - Global Market Sentiment Survey whitepaper - 2014

Investment professionals increasingly confident global and local economies will grow in 2014

Economic turnaround in Europe is reflected in greater optimism about the worldwide economy, tempered by concerns over political instability.

Most CFA Institute members (63%) think the global economy will expand in
2014. This optimistic outlook represents a significant shift from the previous
two years; in last year’s Global Market Sentiment Survey, only 40% of members
expressed optimism about the worldwide economy (fig.1). This year, members in the
United Kingdom are the most optimistic about the global economy, with 78% expecting expansion. Brazilian and German members are similarly positive, with 74% and 70%, respectively. Members in China are the most cautious, with only 48% saying they expect the global economy to expand in the coming year. Even this number, however, is significantly higher than the mere 21% of members in China who expected global growth in 2013.

This same spirit of optimism carries through to members’ assessments of
prospects for their local markets, with a majority in each region anticipating
local economic growth in 2014 (fig.2). Particularly striking is the turnaround in
sentiment in Europe, reflecting members’ belief that the bottom has been reached
and a rebound has begun. 56% of members in EMEA (Europe, the Middle
East, and Africa) countries expect their local markets to expand in 2014, a sharp
contrast from last year’s survey, in which only 33% of EMEA members indicated
the same thing. Overall 79% of members indicate that the progress of recovery
in Europe will have a positive impact on their local markets. Also noteworthy is the
increased optimism in Japan over local economic expansion compared to 2013.

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    CFA Institute - Global Market Sentiment Survey: Detailed results - January 2014 CFA Institute - Global Market Sentiment Survey: Detailed results - January 2014 Presentation Transcript

    • GLOBAL MARKET SENTIMENT SURVEY 2014 DETAILED SURVEY RESULTS December 2013
    • TABLE OF CONTENTS EXECUTIVE SUMMARY FULL RESULTS 1. INVESTMENT PROFESSIONALS INCREASINGLY CONFIDENT GLOBAL AND LOCAL ECONOMIES WILL GROW IN 2014 2. POLITICAL INSTABILITY AND THE END OF QUANTITATIVE EASING BRING UNCERTAINTY TO LOCAL MARKETS 3. MEMBERS CALL FOR GLOBAL OVERSIGHT AND LOCAL ENFORCEMENT 4. LACK OF ETHICAL CULTURE IN FINANCIAL FIRMS ERODING INVESTOR TRUST ABOUT THIS STUDY CFA Institute
    • EXECUTIVE SUMMARY CFA Institute members report greater optimism over economic prospects for the coming year, with an especially dramatic turn in sentiment from European members compared to last year. But these same investment professionals do not express confidence that the integrity of capital markets is improving. As markets rebound, CFA Institute is working to ensure that attention does not shift away from meaningful reforms that might restore investor trust and strengthen the financial system’s ability to resist shocks in the future. CFA Institute Global Market Sentiment Survey 2014 3
    • INVESTMENT PROFESSIONALS INCREASINGLY CONFIDENT GLOBAL AND LOCAL ECONOMIES WILL GROW IN 2014 Economic turnaround in Europe is reflected in greater optimism about the worldwide economy, tempered by concerns over political instability. CFA Institute
    • IN 2014, DO YOU EXPECT THE GLOBAL ECONOMY TO: Global AMER APAC EMEA 69% 63% 62% 56% 31% 27% 27% 23% 12% 9% 9% 6% Expand Stay roughly the same Contract “Not Sure” option not displayed CFA Institute Global Market Sentiment Survey 2014 5
    • IN 2014, DO YOU EXPECT THE GLOBAL ECONOMY TO: Expand Global Stay roughly the same Contract 63% 27% United Kingdom 9% 78% Brazil 16% 74% Germany 24% 70% South Africa 23% 65% Switzerland 6% 64% 5% 25% 21% 9% 12% Canada 62% 27% 10% USA 62% 28% 9% Japan 61% Australia 59% Singapore 34% 59% India Hong Kong China 4% 31% 8% 28% 56% 12% 31% 54% 29% 48% 34% 12% 15% 12% “Not Sure” option not displayed CFA Institute Global Market Sentiment Survey 2014 6
    • IN 2014, DO YOU EXPECT THE GLOBAL ECONOMY TO: 2012 2013 2014 69% 63% 62% 56% 50% 40% 34% 42% 41% 39% 36% 38% 32% 38% 34% 38% 35% 27% 25% 30% 27% 35% 34% 31% 23% 29% 27% 20% 27% 24% 22% 12% 9% 14% 9% 6% Global AMER APAC Expand EMEA Global AMER APAC EMEA Stay roughly the same Global AMER APAC EMEA Contract “Not Sure” option not displayed CFA Institute Global Market Sentiment Survey 2014 7
    • IN 2014, DO YOU EXPECT YOUR LOCAL ECONOMY TO: Local aggregate 57% AMER APAC EMEA 59% 56% 52% 33% 32% 34% 34% 13% 9% Expand Stay roughly the same 8% 9% Contract “Not Sure” option not displayed CFA Institute Global Market Sentiment Survey 2014 8
    • IN 2014, DO YOU EXPECT YOUR LOCAL ECONOMY TO: Expand Local aggregate Stay roughly the same Contract 57% 33% United Kingdom 74% Japan 73% Germany 22% 61% Switzerland 46% China 45% Hong Kong 5% 15% 43% 47% South Africa 32% 47% Singapore 9% 38% 51% Canada 8% 28% 52% Brazil 1% 29% 56% Australia 5% 33% 62% India 3% 21% 65% USA 9% 6% 43% 9% 41% 11% 40% 34% 37% 44% 14% 18% 18% “Not Sure” option not displayed CFA Institute Global Market Sentiment Survey 2014 9
    • IN 2014, DO YOU EXPECT YOUR LOCAL ECONOMY TO: 2012 2013 2014 59% 57% 56% 52% 45% 42% 49% 46% 47% 46% 40% 38% 33% 44% 42% 41% 37% 33% 36% 34% 32%31% 34% 30% 24% 24% 21% 17% 16% 9% Local aggregate AMER APAC Expand EMEA Local aggregate AMER APAC EMEA Stay roughly the same Local aggregate 13% 12% 16% 13% 9% 8% AMER APAC EMEA Contract “Not Sure” option not displayed CFA Institute Global Market Sentiment Survey 2014 10
    • WHAT DO YOU SEE AS HAVING THE BIGGEST POSITIVE IMPACT ON GLOBAL CAPITAL MARKETS IN 2014?* Global AMER APAC EMEA 38% 34% 32% 29% 28% 26% 26% 22% 22% 22% 21% 20% 10% 8% 4% 5% 5% 5% 5% 5% 5% 5% 2% 2% Increased focus Growth rates Increased focus Reducing tax on among emerging on solutions to rates on income resolving/easing economies create more jobs and capital gain global sovereign debt challenges CFA Institute Increased market transparency Global Market Sentiment Survey 2014 3% 2% Improved regulation 2% 1% 2% 5% 3% 1% Improved enforcement of existing regulation Other *“No opinion” option excluded from results. 11
    • WHAT DO YOU SEE AS HAVING THE BIGGEST POSITIVE IMPACT ON GLOBAL CAPITAL MARKETS IN 2014?* Increased focus on resolving/easing global sovereign debt challenges Growth rates among emerging economies Increased focus on solutions to create more jobs Global 32% 26% Brazil 21% 49% Germany 45% India 44% Switzerland 22% 43% Australia 22% 34% China 34% South Africa 34% Singapore Japan 26% 25% 18% 29% 21% 22% 15% 26% 28% 27% 14% 24% 23% 30% USA 19% 24% 35% Canada 24% 30% 35% United Kingdom 12% 22% 37% Hong Kong 8% 28% 44% 21% 22% 21% 24% *Displaying top three positive impacts on global capital markets. CFA Institute “No opinion” option excluded from results. Global Market Sentiment Survey 2014 12
    • EQUITIES EXPECTED TO PROVIDE THE HIGHEST RETURN AMONG ASSEST CLASSES IN 2014 CFA Institute
    • RANK THE FOLLOWING ASSET CLASSES IN ORDER OF EXPECTED TOTAL RETURN IN THE GLOBAL MARKETS IN 2014* Global 71% 71% AMER APAC EMEA 71% 68% 10% 11% 10% 11% Equities Commodities 9% 9% 8% 9% Precious metals 6% 5% 7% 6% Cash 7% 4% 4% 4% Bonds *Chart displaying proportion of members ranking the asset class as likely to have the highest expected return. CFA Institute Global Market Sentiment Survey 2014 14
    • RANK THE FOLLOWING ASSET CLASSES IN ORDER OF EXPECTED TOTAL RETURN IN THE GLOBAL MARKETS IN 2014* Equities Commodities Global Precious metals Cash Bonds 71% Japan 10% 9% 80% United Kingdom 77% Singapore 5% 76% 6% 7% 1% 6% 9% 7% 2% 6% 8% 6% Australia 75% Switzerland 74% USA 73% 10% South Africa 73% 10% 6% 9% 10% Hong Kong Canada 5% India 54% 13% 5% 3% 5% 2% 7% 11% 9% 10% 11% 5% 1% 8% 13% 61% 55% 9% 9% 13% 11% 4% 3% 3% 10% 11% 69% Brazil 9% 10% 69% Germany China 11% 71% 4% 5% 3% 7% 9% 11% 12% 3% 10% 8% 14% *Chart displaying proportion of members ranking the asset class as likely to have the highest expected return. CFA Institute Global Market Sentiment Survey 2014 15
    • RANK THE FOLLOWING ASSET CLASSES IN ORDER OF EXPECTED TOTAL RETURN IN THE GLOBAL MARKETS IN 2014* 2012 2013 2014 71% 50% 41% 25% 22% 15% 16% 10% 9% 10% 9% 4% Equities Commodities Precious metals Cash 6% 8% 4% Bonds *Chart displaying proportion of members ranking the asset class as likely to have the highest expected return. CFA Institute Global Market Sentiment Survey 2014 16
    • UNITED STATES AND CHINA CONTINUE TO PROVIDE THE BEST INVESTMENT OPPORTUNITIES CFA Institute
    • WHICH EQUITY MARKET DO YOU THINK WILL PROVIDE THE BEST INVESTMENT OPPORTUNITY IN 2014?* Global 26% 10% 6% 6% 5% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% *Chart shows proportion of members picking the market as the best investment opportunity CFA Institute Global Market Sentiment Survey 2014 18
    • WHICH EQUITY MARKET DO YOU THINK WILL PROVIDE THE BEST INVESTMENT OPPORTUNITY IN 2014?* Global AMER APAC EMEA 31% 26% 25% 20% 16% 10% 9% 10% 8% 6% 5% 6% 6% 6% 7% 5% 5% 6% 6% 1% USA China Japan Germany Brazil *Chart shows proportion of members picking the market as the best investment opportunity (top 5 displayed) CFA Institute Global Market Sentiment Survey 2014 19
    • INVESTMENT SERVICES JOB MARKET OUTLOOK CFA Institute
    • IN 2014, DO YOU EXPECT EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS IN YOUR LOCAL MARKET TO INCREASE, DECREASE, OR STAY ABOUT THE SAME? Local aggregate AMER APAC EMEA 53% 50% 46% 44% 33% 28% 26% 27% 27% 23% 22% 20% Increase Stay about the same Decrease “Not Sure” option excluded CFA Institute Global Market Sentiment Survey 2014 21
    • IN 2014, DO YOU EXPECT EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS IN YOUR LOCAL MARKET TO INCREASE, DECREASE, OR STAY ABOUT THE SAME? Increase Local aggregate Stay about the same 28% Decrease 50% Japan 55% China 30% 48% United Kingdom 30% USA 29% Singapore Germany 24% 54% 25% 50% 17% 16% 16% 19% 50% 17% Switzerland 32% 52% 19% South Africa 21% 38% 21% Brazil 12% 49% 27% Canada 17% 43% 30% Australia 15% 35% 45% India Hong Kong 22% 30% 60% 22% 53% 31% 69% 38% 14% 46% “Not Sure” option excluded CFA Institute Global Market Sentiment Survey 2014 22
    • IN 2014, DO YOU EXPECT EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS IN YOUR LOCAL MARKET TO INCREASE, DECREASE, OR STAY ABOUT THE SAME? 2012 51% 2013 49% 2014 50% 35% 33% 28% 22% 17% 14% Increase Stay about the same Decrease “Not Sure” option excluded CFA Institute Global Market Sentiment Survey 2014 23
    • POLITICAL INSTABILITY AND THE END OF QUANTITATIVE EASING BRING UNCERTAINTY TO LOCAL MARKETS Investment professionals in some major markets point towards political instability and unrest in the Middle East to impact local performance. CFA Institute
    • WHAT DO YOU SEE AS THE BIGGEST RISK TO GLOBAL CAPITAL MARKETS IN 2014? Global AMER APAC EMEA 33% 32% 31% 28% 27% 25% 24% 23% 23% 21% 20% 18% 13% 13% 13% 12% 7% 6% 5% 5% 4% 4% 4% 4% 2% 2% 2% 2% Weak economic conditions CFA Institute Political instability Systemic disruptions Growth rates among emerging economies Excess regulation Global Market Sentiment Survey 2014 Weak regulation Other "No opinion” option excluded from results. 25
    • WHAT DO YOU SEE AS THE BIGGEST RISK TO GLOBAL CAPITAL MARKETS IN 2014?* Weak economic conditions Global Political instability 31% 25% China 44% India 13% 32% Hong Kong 32% Canada Germany Japan 12% 18% 29% 28% 27% 28% 22% 15% 21% 23% 23% Switzerland 17% 32% 24% United Kingdom 19% 22% 29% Australia 19% 27% 30% Singapore 26% 14% 36% USA 13% 6% 39% Brazil 20% 19% 43% South Africa Systemic disruptions 24% 30% 25% 21% 34% 43% 12% *Displaying top three risks to global markets. “No opinion” option excluded from results. CFA Institute Global Market Sentiment Survey 2014 26
    • WHAT DO YOU SEE AS THE BIGGEST RISK TO YOUR LOCAL MARKET IN 2014? Local aggregate AMER APAC EMEA 33% 31% 31% 31% 28% 28% 24% 24% 18% 17% 16% 15% 12% 10% 10% 9% 8% 7% 7% 6% 6% 6% 5% 5% 5% 4% 3% 1% Weak economic conditions CFA Institute Political instability Excess regulation Systemic disruptions Growth rates among emerging economies Global Market Sentiment Survey 2014 Weak regulation Other “No opinion” option excluded from results. 27
    • WHAT DO YOU SEE AS THE BIGGEST RISK TO YOUR LOCAL MARKET IN 2014?* Weak economic conditions Local aggregate 31% 28% Australia 2% 7% 43% United Kingdom 5% 41% Japan 29% USA 16% 30% Brazil 28% Singapore 9% 21% India 19% 15% 8% 18% 18% 2% 5% 21% 22% Switzerland 13% 37% 24% Germany 16% 38% 26% Hong Kong 9% 13% 33% China Excess regulation 15% 49% Canada South Africa Political instability 12% 5% 6% 31% 43% 53% 6% 78% 3% *Displaying top three risks to local markets. CFA Institute Global Market Sentiment Survey 2014 “No opinion” option excluded from results. 28
    • WHAT IMPACT, IF ANY, WILL THE FOLLOWING HAVE ON YOUR LOCAL MARKET IN 2014: Scale: Negative impact, No impact, Positive impact and Don’t know 79% 71% 68% 60% 59% 39% 37% 35% 26% 12% 13% Effects on energy prices caused by unrest in Middle East Don’t know 2% Negative impact Don’t know Positive impact No impact Negative impact Don’t know Positive impact No impact Negative impact Don’t know Positive impact No impact Negative impact 11% 4% 2% Don’t know Positive impact No impact 3% Negative impact Don’t know Positive impact No impact 4% Negative impact Don’t know Positive impact No impact Negative impact 13% 8% 5% CFA Institute 15% 13% Central banks attempts to end quantitative easing 26% 22% Positive impact 14% 12% 22% No impact 23% Fallout from rigging Growth of non-bank Political stability in Progress of recovery Progress of recovery of benchmark rates lending or shadow your home market in China in Europe banking sector Global Market Sentiment Survey 2014 29
    • WHAT IMPACT, IF ANY, WILL THE FOLLOWING HAVE ON YOUR LOCAL MARKET IN 2014: Scale: Negative impact, No impact, Positive impact and Don’t know AMER APAC EMEA 87% 72% 68% 65% 80% 75% 78% 75% 69% 68% 52% 43% 72% 51% 46% 39% 25% 22% 22% 18% 17% 13% 13% 11% 10% 6% 20% 28% 26% 22% 30% 23% 23% 13% 13% 10% 7% 3% 9% 7%8% 3% Negative Positive Negative Positive Negative Positive Negative Positive Negative Positive Negative Positive Negative Positive impact impact impact impact impact impact impact impact impact impact impact impact impact impact Central banks attempts to end quantitative easing Effects on energy prices caused by unrest in Middle East Fallout from rigging Growth of non-bank Political stability in Progress of recovery Progress of recovery of benchmark rates lending or shadow your home market in China in Europe banking sector “No impact” and “Don’t know” option not displayed CFA Institute Global Market Sentiment Survey 2014 30
    • IN THE COMING 12 MONTHS, DO YOU ANTICIPATE A FINANCIAL BUBBLE IN YOUR LOCAL MARKET AND IF SO, WITHIN WHICH ASSET CLASS? Local aggregate AMER APAC EMEA 52% 51% 50% 47% 32% 30% 26% 16% 15% 13% 10% 7% 13% 10% 7% 4% 1% 1% 2% 1% Real estate CFA Institute Equities Bonds 1% 1% 1% 1% 1% 1% 1% 1% 1% 2% 1% 1% Precious metals Commodities Cash Other Global Market Sentiment Survey 2014 Do not anticipate a financial bubble 31
    • IN THE COMING 12 MONTHS, DO YOU ANTICIPATE A FINANCIAL BUBBLE IN YOUR LOCAL MARKET AND IF SO, WITHIN WHICH ASSET CLASS? Real estate Local aggregate Equities Bonds 26% 13% China 10% 1% 77% Hong Kong 5% 3% 68% Singapore 5% 59% United Kingdom 8% 47% Canada 16% Brazil 7% 8% 5% 34% 3% 1% 2% 5% 43% Germany 5% 0% 5% 48% Switzerland 5% 9% 50% India 5% 23% USA 9% 5% 1% 2% 13% 32% Japan 4% 6% 51% Australia South Africa Precious metals 1% 12% 19% 2% 14% 1% 16% 27% 7% *Displaying top four response options (excluding proportion selecting no financial bubble) CFA Institute Global Market Sentiment Survey 2014 32
    • MEMBERS CALL FOR GLOBAL OVERSIGHT AND LOCAL ENFORCEMENT Globally, members cite improved regulation and oversight of global systemic risks as the most important action needed in 2014 to build investor trust and market integrity. At the local level members say better enforcement of existing laws and stronger corporate governance standards are the steps needed to improve market integrity. CFA Institute
    • HOW WOULD YOU RATE THE LEVEL OF INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2013? Scale: Poor (1) to Excellent (5) Global 56% AMER 57% APAC 56% EMEA 56% 26% 22% 23% 21% 21% 22% 21% 18% Poor (1 + 2) 3 Excellent (4+5) Chart displays Poor(1+2), 3 and Excellent (4+5) CFA Institute Global Market Sentiment Survey 2014 34
    • HOW WOULD YOU RATE THE LEVEL OF INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2013? Scale: Poor (1) to Excellent (5) Poor (1 + 2) Global 3 Excellent (4+5) 22% Switzerland 56% 21% 32% India 56% 28% 12% 55% 17% Germany 26% 53% 21% Australia 25% 54% 21% Singapore 25% 53% 22% Japan 24% 52% United Kingdom 23% 55% USA 22% Canada 55% 20% South Africa 18% Brazil China CFA Institute 16% 13% 22% 23% 60% 19% Hong Kong 24% 59% 56% 60% 61% Global Market Sentiment Survey 2014 19% 23% 27% 23% 26% 35
    • HOW WOULD YOU RATE THE LEVEL OF INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2013? Scale: Poor (1) to Excellent (5) 2012 2013 56% 54% 26% 22% Poor (1 + 2) 20% 3 21% Excellent (4+5) Chart displays Poor(1+2), 3 and Excellent (4+5) CFA Institute Global Market Sentiment Survey 2014 36
    • DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2014 WILL BE BETTER OR WORSE THAN IN 2013? Global AMER APAC EMEA 71% 68% 67% 61% 32% 27% 26% 23% 6% Better CFA Institute About the same Global Market Sentiment Survey 2014 6% 7% 6% Worse 37
    • DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2014 WILL BE BETTER OR WORSE THAN IN 2013? Better Global About the same Worse 26% 68% China 39% Australia 56% 36% India 57% 34% Brazil United Kingdom 57% 32% 32% Japan South Africa 62% 28% Singapore 64% 29% 27% Germany 67% 66% 23% USA 22% Hong Kong 22% 69% 23% Switzerland 5% 7% 8% 4% 6% 70% 24% Canada CFA Institute 6% 71% 69% 71% 70% Global Market Sentiment Survey 2014 1% 5% 6% 6% 6% 8% 6% 8% 38
    • DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN (UPCOMING YEAR*) WILL BE BETTER OR WORSE THAN IN (CURRENT YEAR**)? 2012 2013 2014 67% 68% 56% 26% 26% 22% 22% 7% Better About the same 6% Worse *Upcoming year displayed the future year (e.g. 2014) **Current year displayed the present year (e.g. 2013) CFA Institute Global Market Sentiment Survey 2014 39
    • WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED IN THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY? GLOBALLY IN LOCAL MARKET 30% 29% 24% 21% 17% 17% 16% 15% 11% 10% 6% 5% Improved regulation Improved transparency Improved corporate Improved enforcement and oversight of global of financial reporting governance practices of existing laws and systemic risk and other corporate regulations disclosures CFA Institute Global Market Sentiment Survey 2014 Improved market trading rules on transparency and frequency of trades Improved auditing practices and standards 40
    • WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED GLOBALLY IN THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY? Global 29% 21% India 48% China 17% 16% 11% 46% 15% 15% 13% 11% Hong Kong 40% 9% Singapore 39% 13% South Africa 38% 13% Brazil 37% 15% 16% Germany 36% 9% 19% 12% Australia 32% United Kingdom 32% 13% Japan 30% 15% Canada 29% 16% Switzerland 29% USA CFA Institute 22% 17% 12% 28% 23% 16% 13% 6% 13% 17% 8% 11% 1% 20% 18% 18% 16% 8% 10% 3% 16% 10% 4% 11% 4% 20% 22% 18% 7% 16% 21% 19% 6% 6% 14% 19% 6% 13% 15% 18% 18% 11% 10% 4% 18% 15% 15% 11% Global Market Sentiment Survey 2014 Improved regulation and oversight of global systemic risk Improved transparency of financial reporting and other corporate disclosures Improved corporate governance practices Improved enforcement of existing laws and regulations Improved market trading rules on transparency and frequency of trades Improved auditing practices and standards 8% 5% 4% 7% 41
    • WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED IN YOUR LOCAL MARKET FOR THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY? Local aggregate 30% Brazil 24% 17% 41% 15% 24% 17% China 34% Canada 33% India 32% South Africa 32% United Kingdom 31% 24% Australia 30% 27% 14% Germany 30% 27% 13% USA 30% 14% 27% 22% 10% 5% 7% 3% 8% 12% 16% 31% 5% 8% 15% 20% 9% 4% 4% 5% 8% Improved enforcement of existing laws and regulations Improved corporate governance practices Switzerland Hong Kong Singapore Japan CFA Institute 24% 19% 23% 16% 11% 13% 10% 21% 10% 20% 19% 48% 10% 17% 31% 23% 12% 9% 16% 31% 21% 16% 9% 20% 13% 10% 17% 6% 12% 4% 15% 4% 10% 4% 16% 10% 15% 13% 8% Improved transparency of financial reporting and other corporate disclosures Improved market trading rules on transparency and frequency of trades Improved regulation and oversight of global systemic risk Improved auditing practices and standards 3% 9% 7% 5% 11% Global Market Sentiment Survey 2014 42
    • IN YOUR OPINION, IS EACH OF THE FOLLOWING REGULATORY REFORMS MORE LIKELY TO: Scale: Have no impact, Prevent future financial crises, Result in unintended negative consequences and No opinion Global 73% 68% 68% 66% 53% 51% 49% 46% 40% 34% 33% 27% Require Banks Increased More Increased bank Proposals like Proposals for to impair global standardized capital and the Volcker ring-fencing troubled credit coordination of contracts with liquidity Rule to limit retail banking holdings on a monitoring of increased requirements bank proprietary activities more consistent systemic risks central clearing trading and timely basis Designation of “too big to fail” institutions for closer monitoring Negative consequences Prevent future crises Negative consequences Prevent future crises Negative consequences Prevent future crises Negative consequences Prevent future crises Negative consequences Prevent future crises Negative consequences Prevent future crises Negative consequences 12% Prevent future crises Negative consequences 12% Prevent future crises Negative consequences 24% 20% 16% Prevent future crises 27% Increased Reduce reliance regulatory on and monitoring of reference to hedge funds credit-ratings agency ratings “Have no Impact” option not displayed “No opinion” option excluded CFA Institute Global Market Sentiment Survey 2014 43
    • PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Local aggregate AMER APAC EMEA 32% 30% 25% 23% 24% 24% 23% 21% 21% 20% 16% 15% 13% 11% 9% 15% 14% 12% 9% 10% 10% 9% 7% Mis-selling by financial advisers Market fraud Market trading practices Integrity of financial reporting Disclosure/use of financial derivatives 8% Investment management services/structure *Chart displaying proportion of members ranking the ethical issue as the most serious facing their local market. CFA Institute Global Market Sentiment Survey 2014 44
    • PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Mis-selling by financial advisers Local aggregate Market fraud 25% 24% South Africa 16% 53% Australia 11% 48% Germany 12% 40% Canada Switzerland 34% United Kingdom Japan 20% Brazil 4% 30% 27% 10% 7% 23% 24% 14% 8% 6% 28% 22% USA 12% 34% 25% Hong Kong 12% 21% 27% Singapore 14% 13% 30% India 14% 17% 31% 2% 12% 12% 34% China Market trading practices 52% 55% 2% 5% *Chart displaying the top three ethical issues facing local market (based on global rankings) CFA Institute Global Market Sentiment Survey 2014 45
    • PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* 2012 2013 2014 29% 25% 24% 22% 19% 18% 16% 16% 14% 13% 16% 15% 15% 13% 12% 12% 11% 10% Mis-selling by financial advisers Market fraud Market trading practices Integrity of financial reporting Disclosure/use of financial derivatives Investment management services/structure *Chart displaying proportion of members ranking the ethical issue as the most serious facing their local market. CFA Institute Global Market Sentiment Survey 2014 46
    • PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Global 27% AMER APAC EMEA 27% 24% 24% 21% 21% 21% 20% 20% 18% 18% 17% 16% 16% 16% 15% 15% 12% 12% 11% 9% 8% 6% 5% Market fraud Integrity of financial reporting Disclosure/use of financial derivatives Market trading practices Mis-selling by financial advisers Investment management services/structure *Chart displaying proportion of members ranking the ethical issue as the most serious facing global markets. CFA Institute Global Market Sentiment Survey 2014 47
    • PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Market fraud Global Integrity of financial reporting 24% Singapore 21% 30% Japan 26% United Kingdom 26% Canada Australia China India 22% 20% 16% 22% 19% 16% 19% 13% 12% 19% 16% 15% 14% 18% 17% 19% 16% 23% Germany 18% 22% 24% Switzerland 20% 26% 26% Hong Kong 22% 15% 28% Brazil South Africa 20% 15% 29% USA Disclosure/use of financial derivatives 28% 24% 17% 21% 16% 32% 34% *Chart displaying the top three ethical issues facing global markets (based on global rankings) CFA Institute Global Market Sentiment Survey 2014 48
    • PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* 2012 2013 2014 24% 23% 21% 21% 20% 21% 20% 19% 16% 16% 16% 15% 15% 13% 12% 12% 8% 6% Market fraud Integrity of financial reporting Disclosure/use of financial derivatives Market trading practices Mis-selling by financial advisers Investment management services/structure *Chart displaying proportion of members ranking the ethical issue as the most serious facing global markets. CFA Institute Global Market Sentiment Survey 2014 49
    • LACK OF ETHICAL CULTURE IN FINANCIAL FIRMS ERODING INVESTOR TRUST To rebuild the confidence of investors in the financial sector, ethical conduct cannot simply be legislated or taken for granted; it must be fostered and encouraged by an ethical culture at the firm-level. CFA Institute
    • WHICH FACTOR DO YOU THINK HAS CONTRIBUTED THE MOST TO THE CURRENT LACK OF TRUST IN THE FINANCE INDUSTRY? Global AMER APAC EMEA 61% 56% 54% 51% 16% 13% 12% 7% 12% 10% 10% 9% 7% 7% 9% 11% 10% 7% 4% 3% Lack of ethical culture within financial firms Market disruptions Poor government enforcement (failed IPO’s, flash crash etc.) Poor government regulation 4% 5% 6% 8% 2% 2% 2% 2% Lack of staff I don’t think there is training and a lack of trust in the education within finance industry. financial firms Other “No opinion” option excluded from results. CFA Institute Global Market Sentiment Survey 2014 51
    • WHICH FACTOR DO YOU THINK HAS CONTRIBUTED THE MOST TO THE CURRENT LACK OF TRUST IN THE FINANCE INDUSTRY?* Lack of ethical culture within financial firms Global Poor government enforcement Market disruptions (failed IPO’s, flash crash etc.) 54% 13% Switzerland 10% 71% Singapore 2% 5% 63% India 7% 9% Japan 60% South Africa 60% United Kingdom 60% Germany 4% 11% 52% Hong Kong 52% USA China 11% 10% 12% 54% Brazil 9% 7% 55% Australia 7% 10% 58% Canada 11% 13% 62% 13% 12% 11% 8% 7% 20% 49% 9% 17% 43% 15% 10% 17% *Displaying top three factors contributing to the current lack of trust in the finance industry. CFA Institute Global Market Sentiment Survey 2014 “No opinion” option excluded from results. 52
    • WHICH ONE OF THE FOLLOWING FIRM LEVEL ACTIONS IS MOST NEEDED IN THE COMING YEAR TO HELP IMPROVE INVESTOR TRUST AND CONFIDENCE? Global 40% 39% AMER APAC EMEA 40% 40% 28% 26% 25% 25% 13% 13% 14% 13% 14% 12% 12% 9% 6% 7% 8% 5% 2% Improved culture established and encouraged by top management and executives CFA Institute Increased adherence to ethical codes and standards Improved compensation practices Clarification of fiduciary duty responsibilities Increased staff training and education 3% 1% 2% Other “No opinion” option excluded from results. Global Market Sentiment Survey 2014 53
    • WHICH ONE OF THE FOLLOWING FIRM LEVEL ACTIONS IS MOST NEEDED IN THE COMING YEAR TO HELP IMPROVE INVESTOR TRUST AND CONFIDENCE? Global 40% Singapore 26% 49% Germany 20% 46% Canada 44% Japan 43% Switzerland 43% United Kingdom 43% Australia 42% USA 38% India 20% 36% China Brazil 34% 30% 25% 23% 30% 8%1% 18% 15% 11% 1% 9% 14% 15% 8% 3% 12% 14% 5%3% 14% 15% 17% 10% Increased adherence to ethical codes and standards Improved compensation practices Clarification of fiduciary duty responsibilities Increased staff training and education Other 7%1% 18% 15% Improved culture established and encouraged by top management and executives 8%1% 15% 8% 13% 5%3% 10% 6%3% 16% 37% 29% 6%2% 10% 10% 23% 39% Hong Kong 20% 6% 7%1% 12% 15% 27% 6%2% 7% 10% 3% 11% 22% 18% 12% 16% 24% 44% South Africa 13% 3% 10% 2% “No opinion” option excluded from results. CFA Institute Global Market Sentiment Survey 2014 54
    • ABOUT THIS STUDY
    • ABOUT THIS SURVEY The CFA Institute Global Market Sentiment Survey was created to seek input from CFA Institute members and gather feedback on market sentiment, performance, and market integrity issues, and to further our mission of promoting ethical and trustworthy investment markets. METHODOLOGY An online survey was conducted from 2 to 17 October 2013. All CFA Institute members globally (119,817) were invited to participate in the survey; 6,561 responded, for an overall response rate of 5.5% and a margin of error of ±1.8%. In addition to analysis and reporting at the global and regional level, 13 market-specific reports are also included. Note: Total percentage of some charts in this report may not add up to 100% due to rounding CFA Institute Global Market Sentiment Survey 2014 56
    • RESPONDENT PROFILE TOP MARKETS USA # OF RESPONDENTS 2,906 CANADA UNITED KINGDOM 172 GERMANY 167 CHINA 162 INDIA 162 AUSTRALIA 159 SINGAPORE 137 SOUTH AFRICA 17% APAC 185 SWITZERLAND 24% EMEA 302 HONG KONG 59% AMER 738 105 BRAZIL JAPAN CFA Institute Global Market Sentiment Survey 2014 95 87 57
    • RESPONDENT PROFILE Primary Investment Practice (Top 5) 34% Years In Industry ≤ 5 years 6 to 10 years 11 to 15 years 16 to 20 years >20 years Not Applicable 17% 3% 4% 13% 3% 3% Derivatives Real Estate 21% Equities Fixed Income Private Equity Job Function (Top 6) 31% 14% 19% 14% 18% 6% Portfolio Manager CFA Institute Research Analyst Global Market Sentiment Survey 2014 6% 6% Financial Advisor Consultant Corporate Financial Analyst 4% Risk Manager 58
    • ABOUT CFA INSTITUTE CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors’ interests come first, markets function at their best, and economies grow. CFA Institute has more than 119,000 members in 140 countries and territories, including 112,000 CFA charterholders, and 137 member societies. For more information, visit www.cfainstitute.org. QUESTIONS? Media inquiries: J.D. McCartney Director, Public Relations, The Americas jd.mccartney@cfainstitute.org LEARN MORE ABOUT THIS STUDY ON OUR WEBSITE AT: www.cfainstitute.org/gmss Survey inquiries: Prashant Goswami Analyst, Market Intelligence MarketIntel@cfainstitute.org CFA Institute Global Market Sentiment Survey 2014 59