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BENGALURU: According to a Reuters survey, it is not far from the uptrend in global equities, but next year's forecast of worries about global growth and the pace of Tightening of the financial situation has also been considerably reduced.
Global equities reached low levels late October amid a brutal rout that erased billions of dollars in market value, under the impetus of a US-led trade war and a A federal reserve is faltering.
The recent turbulent stock sale is more or less over, according to nearly 250 equity strategists surveyed from November 13 to 28. But above all they said that 2018 would end up being a forgotten year, with most markets ending up in the red.
While all 17 stock indexes surveyed except one are expected to grow by the end of 2019, about half are not expected to recover this year's losses. Strategists also reduced their outlook compared to three months ago, when almost everyone had missed the recent rout.
Shanghai's composite index was the only exception, as strategists raised their outlook compared to three months ago. But even Chinese equities will not fully recover this year 's losses by more than 20% by the end of 2019.
The latest forecasts for most stock indexes were below what strategists had drawn earlier this year and clearly show that the hot tides of 2017 are in the rearview mirror.
Risks that have recently pushed stocks down (trade tensions, Brexit negotiations, emerging market issues) could hurt the US financial system, the Fed said in a first-ever report on financial stability.
Nevertheless, more than 40% of strategists who answered an additional question, 48 out of 110, said the current uptrend in global equities was still more than a year old. About 25% expect this to end within a year.
But nearly a third of those surveyed said the bull market had already ended.
"While volatility will remain high – we have already seen two corrections of 10% this year already – we do not think that a real bear market will be in place until we are in recession or going into recession. "said Mona Mahajan, investment strategist at Allianz Global Investors.
"We do not expect a recession in the US over the next 12 months, but markets are starting to push down recession prices between one and six months ago, so we could technically see a bear market starting in the near future. end of next year. "
Fears of an escalation of the US-China trade war have left Wall Street strategists less optimistic about the gains made by the S & P 500 next year, but they're not sure how much money they'll make. They are still waiting for the index to close higher next year.
"Although the cycle is not over before the end, the establishment of strong defenses will now help to overcome the volatility and uncertainty of the last cycle," said Richard Lacaille, global investment director at State Street Global. Advisors.
"Although the S & P 500 experienced its longest uptrend in August 2018, a stern correction in October reminded us that we are closer to the end of the cycle than the beginning and that investors need to be prepared to increased volatility. "
(Reuters poll chart on the race for the bull of equity: https://tmsnrt.rs/2QqfCPF?eikon=true)
The slowdown in economic growth, political risks and worries over Washington's protectionist policies will limit major European stock markets in 2019.
After a deadly year up to now, the UK's best stock market index will return to ground in 2019, but the gains will be much more moderate than previously thought, as investors attempt to navigate the split of the stock market. countries of the European Union.
While worries about trade, worries about China's economic slowdown and currency volatility are likely to persist, emerging market equities, which had a very difficult year, are expected to outperform developed-country equities.
The main stock exchanges in Latin America are expected to extend until 2019, especially the Brazilian Bovespa index, which is expected to record an increase of more than 25% by the end of 2019.
But the outlook for Indian equities has been downgraded for the first time this year.
Despite a sharp decline in global equities in recent months, only about 27% of the nearly 120 strategists who answered a question described their local market as cheap. About 40% said the price was reasonable and about a third said they were expensive.
While many companies around the world have missed estimates of their profits and many have also significantly reduced their prospects, a majority of strategists who answered a separate question – 64 out of 114 – indicated that corporate earnings growth had not yet reached its maximum point. The other 50 respondents replied in the affirmative.
"The earnings growth rate has peaked, but the absolute level of earnings is expected to continue to increase over the next year, as strong sales growth should continue to drive profits down at a more sustainable pace," said Sameer Samana, world market strategist at Wells. Fargo Investment Institute in St. Louis, referring to the S & P 500.
(Reuters global equity market survey graph: http://tmsnrt.rs/2nHJiJ9)
(Additional reports and surveys by correspondents in Bengaluru, London, Mexico City, Milan, Moscow, New York, Sao Paulo, Shanghai, Tokyo and Toronto, edited by Ross Finley and Chizu Nomiyama)
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