Viral pessimism: millionaire investors prepare for new stock market downturn

US, WASHINGTON (ORDO NEWS) — Most UBS millionaire investors surveyed expect a new drop in stock markets before buying stocks again. Investors remain optimistic for the long term, but expect a global recession in the coming year.

Most wealthy investors in the world in the context of the coronavirus pandemic are waiting for a new fall in stock markets before buying shares, according to a UBS Global Wealth Management survey.

From April 1 to April 20, researchers interviewed 2,928 investors located in 14 countries and holding assets worth at least $ 1 million available for investment. Among investors, 61% said they wanted to wait another 5-20% for stocks to fall before buying them. Almost a quarter of respondents (23%) said that a good time for a purchase had already arrived. About 16% believe that now is not the time to purchase securities.

Almost half of the respondents said they did not plan to make changes to their asset portfolios, 37% were going to invest more, and 16% reduced the volume of investments. The main cause of concern for most investors (57%) is the coronavirus pandemic. In the predictions about when the worst part of the crisis will be behind, investors diverged: a third believes that this will happen at the end of June, another third puts in the fall, the rest – at the end of the year or for the next period.

The restrictions introduced to contain the virus in different countries led to the closure of enterprises and lower consumer demand, which significantly increases the chances of a global economic recession this year, Bloomberg writes.

Stock markets rose more than 20% from the lows reached in March, but remain well below the highs of early 2020. Among the participants in the UBS survey, 60% consider the onset of a global recession very likely in the next 12 months. At the same time, they generally maintain a positive outlook on long-term prospects.

Investor sentiment varies significantly by region. Among US investors, only 30% are positive about the US economy in the short term, although in early January this figure was 68% (UBS conducts a survey of investors on a quarterly basis). In Asia, 55% of investors are constructive.

Although short-term optimism among investors around the world has fallen significantly, its level seems to coincide with the stage of the spread of the pandemic in a particular region, said Paul Polito, Deputy Chairman of the Board of Directors of UBS Global Wealth Management.

“In Asia, where the crisis associated with COVID-19 and mitigation of its consequences occurred earlier, investors seem to be a little more optimistic about stocks in their region. In the USA, which are now experiencing the peak of the crisis, optimism, on the contrary, seems to be lower,” Polito said.


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