Managers tuned in to Chinese growth – Newspaper Kommersant No. 232 (7433) of 12/14/2022

The slowdown in inflation in the US and the easing of anti-COVID restrictions in China had a positive impact on the mood of international investors. In December, portfolio managers’ expectations regarding the outlook for the global economy improved markedly. Against this background, the share of cash in the funds decreased and investments in shares increased. On the isolated Russian stock market, the global improvement in sentiment has a limited impact through the commodity market.

A December survey of portfolio managers by Bank of America (BofA) analysts indicates a slight improvement in investor expectations regarding the outlook for the global economy. According to the agency Bloombergreferring to the BofA report, 281 portfolio managers with $728 billion in assets took part in the survey.

According to the survey, the number of managers who are confident that in the next 12 months the global economic growth will slow down is 69% higher than the number of those who continue to expect the pace to pick up.

A month earlier, there were 73% more pessimists. Concerns about the economic downturn have also decreased: if in November 77% of respondents expected a recession in the world economy next year, then in December – 68%.

Expectations regarding the opening of the Chinese economy contribute to the improvement in sentiment. According to a BofA survey, 74% of those surveyed believe that it will fully open next year. At the same time, according to the data Yahoo! Finance, three-quarters of survey participants expect the Chinese economy to grow in 2023, while in November there were 13% optimists. “Signals from China about softer measures in the fight against coronavirus can become an incentive for the growth of consumer activity not only in the Celestial Empire, but throughout the world by optimizing supply chains,” says the managing director of the equity department of Sistema Capital Management Company Konstantin Asaturov.

Added optimism to investors and data on inflation in the US, which is slowing down for the fourth month in a row. In November, consumer prices rose only 7.1% year-on-year, down 0.6 percentage points (pp) from October and 2 pp below their peak in June. “A slowdown in inflation in the US may give the Fed the opportunity to pursue a less stringent policy than previously expected by a number of market participants,” said Vitaly Isakov, investment director at Otkritie Management Company.

Under such conditions, fund managers began to actively reduce the share of cash in portfolios, including in favor of shares.

Over the month, the average cache share dropped from 6.2% to 5.9%, according to the survey, although the figure remains well above the average over the past ten years. “We do not observe a critical growth in demand for aggressive instruments, but we still note that the mood on global markets has improved,” notes Konstantin Asaturov. “The growth in demand for shares is clearly visible in the growing dynamics of stock indices of developed countries, which have grown by 10–20% since October lows,” notes Vitaly Isakov.

The improvement in global market sentiment has a limited impact on the Russian market. Since the beginning of November, the Moscow Exchange index has fluctuated slightly around the level of 2200 points. “Due to the isolation of the Russian market, it does not have a direct correlation with global markets. But at the same time, the cost of commodities, which depends on the state of the world economy, is still important for the local market,” says Maria Trofimova, an analyst at Trinfico Management Company. According to Mikhail Bespalov, an analyst at KSP Capital Asset Management, easing restrictions in China is important for commodity exporters, and in particular for Russia, since even a partial and temporary closure of production in China can affect demand and prices for raw materials. Therefore, in the event of a recovery in oil prices, the Russian market will receive its share of positive, he notes.

Nevertheless, managers believe that it is too early to make long-term forecasts, as there is still uncertainty in the energy markets, which could lead to higher inflation in the US.

“In addition, the variable responsible for geopolitics still has a lot of weight in the equation for the growth of the world economy, and in this part we also do not rule out surprises,” notes Konstantin Asaturov.

Vitaly Gaidaev