Macroeconomic factors losing their bite

Both the buy side and the sell side report being less concerned over macroeconomic factors, according to new research.

The research from IR Magazine for its Investor Perception Study – Europe 2013 shows that while more than half (51 percent) of respondents had become increasingly worried about macroeconomics in 2012, the reverse is true this year. In 2013, 53 percent of the 186 investment professionals surveyed say they are less concerned about these issues.

While much of this is down to China getting ‘back on its feet’ and improvements in the US economy, adjustments made by the financial community to deal with macroeconomic wobbles also play their part. As one Dutch sell-side analyst says: ‘We have adjusted to last year’s problems and there is enough money in the market for a bullish outlook.’

According to the research, ‘concern about macroeconomic factors has peaked and the overall trend is toward a lessening of their importance when it comes to investment decisions’.

This doesn’t mean, however, that the issue has gone away. Just over one third (34 percent) of respondents have seen no change in their level of concern about macroeconomics compared with last year, while a minority of 13 percent say their concern has increased.

Completing a trio of issues alongside China and the US, the eurozone crisis has also been on the minds of investment professionals. In fact, for those who remain just as concerned about macroeconomic factors as they were last year, Europe is the area of greatest concern. As one buy-sider puts it: ‘The problem of the eurozone has still to be addressed, and we must continue to sit it out.’

Despite continuing problems in the region, however, the research finds that the most commonly used word in relation to Europe is ‘stability’. According to researchers: ‘The macroeconomic climate in Europe may be poor, but there is a view here that it has stabilized and is no longer in fully fledged crisis mode; it is more predictable and therefore easier to operate in.’

For those reporting increased levels of anxiety over macroeconomics, researchers say the issue is largely down to ‘localized factors, namely the performance of specific country economies’.

‘But some respondents are purposefully counterintuitive,’ add researchers. ‘One sell-side analyst based in the UK expresses this view: I’m more concerned because everyone seems less worried. Sorry to be contrary, but that worries me.’

The IR Magazine Investor Perception Study – Europe 2013 features in-depth interviews with IROs and senior management members from award-winning companies, the full Euro Top 100 company rankings and quotes from investors and analysts about why the winners won. To order your copy, please visit www.irmagazine.com/research.