• Almost two thirds of investment professional respondents now find Developed Market Equities overvalued
• Almost one third of investment professional respondents now see Emerging Equities as being overvalued
• “Bond Bubble” fears remain
61% of respondents to the index, which polls the opinions of CFA UK’s membership of 11,000 investment professionals, consider Developed Market Equities as very overvalued or somewhat overvalued, a 17% increase on Q1 2015 and a more than 24% increase on Q2 2014. Indeed, the perception of Developed Market Equities as being overvalued has risen by almost 10% for the last three quarters in a row. Furthermore, the proportion of respondents who view the asset class as undervalued has fallen to its lowest level since the index began, now standing at just 10%.
Fears of a “Bond Bubble” remain; Perceptions of Government Bonds being overvalued has fallen very slightly but overall, the asset class continues to be seen as the most overvalued asset class according to 79% of respondents. The number of investment professionals viewing them as undervalued, or very undervalued, remains low at just 6%. Corporate Bonds similarly continue to be seen as overvalued by almost three quarters of respondents (74%). The number of investment professionals viewing them as undervalued or very undervalued is just 11%.
Meanwhile, despite broad view that the asset class is undervalued, the view of Emerging Market Equities seems to be changing with almost one third of respondents now seeing the class as being overvalued. The proportion of respondents who regard them as overvalued has leapt 25% to 30%, whilst the number who sees them as undervalued has held at 43%.
With relative uncertainty surrounding the outlook for Bonds and Developed Market Equities, the “safe haven” of Gold is increasingly perceived, now by over 48% of respondents, to be currently at fair value (48.80%).
Says Will Goodhart, chief executive of CFA UK: “It appears that investors believe that the liquidity-assisted increases in asset prices that we’ve seen over the past few years have driven valuations in both equity and debt markets well ahead of fair value. Attempting to call a market peak is a fool’s errand, but the fact that a significant majority of respondents now regard developed market equities as overvalued means that there may be limited support for both equity and debt valuations in the face of potential increases in interest rates
|
