Investing and Global Finance News

Anticipation of Economic Upturn Dampened by Asset Managers

Though the world seems to sense an economic upbeat, an investor with management of over $25 billion has expressed his skepticism and lingering concerns.

According to George Osborne, the Office for Budget Responsibility claims that the UK’s economy is expected to grow throughout 2012’s first quarter. He explained that the OBR expect the British economy “to avoid a technical recession with positive growth in the first quarter,” and that the British economy has “carried a little more momentum into the new year than previously anticipated.”

However, a number of asset managers remain anxious in the face of the economy’s current state.

Neil Woodford of Invesco Perpetual, for example, said: “The current wave of optimism sweeping global stock markets assumes that the developed world will now emerge from the period of low economic growth and that growth will continue to disappoint and, in the near term, will slow in 2012.”

Fidelity’s Trevor Greetham added to the situation, expressing his grim outlook on the UK, saying: “America is experiencing a growing housing market, improved car sales, and more job creation. We should be striving to create these conditions here, but austerity is keeping growth weak in the UK.”

Mike Turner of Aberdeen Asset Management shares an opinion with Greetham, stating: “The Eurozone economy is far from out of the woods, there is no instantaneous solution- sovereign deleveraging will take years to play out- and until Europe is providing the UK with a strong market for exports, we will suffer too. We have our own fiscal drag to consider.”

Even those who see the silver lining remain hesitant, as AWD Chase de Vere’s Patrick Connolly proved when he responded to Woodford’s statement. He said: “I don’t believe there is a current ‘wave of optimism sweeping global stock markets.’ There is just not so much negativity. However, stock markets still overreact to economic data and forecasts both on the upside and the downside, and we still face a huge degree of uncertainty and, while equities offer decent long-term value, it would be no surprise if markets either rose of fell significantly from here.”

Where, then, should people invest? He says, “At these times, investors should stick with experienced managers who will largely ignore the short-term noise and will stick to their longer-term strategy.”

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