Lack of global growth greatest concern for Europe’s HNW investors, JP Morgan finds

More than 45% of European high net worth individuals consider lack of global growth to be the biggest investment concern in 2013, according to a study on more than 1000 investors completed by J.P. Morgan Private Bank.

The survey, which took place before the current crisis in Cyprus, revealed other concerns were political (23%), geopolitical unrest (15%), monetary policy mistakes (11%) and inflation (4%) this year.

However, when asked which asset class will outperform over the next 12 months, 60% asserted equities will outperform, following on the strong performance of fixed income markets in 2012.

The remaining 40% were split between private equity (19%), commodities (10%) and hedge funds (9%). High Net Worth investors in Spain, France, Italy and Switzerland were found to have the most optimistic outlook towards equity markets, with 72%, 70%, 59% and 57%, respectively.

Supporting the view that equities will be the outperforming asset class of 2013, more than 35% said they had increased their exposure to European equities in the last six months, and more than 60% per cent said they seek to increase their allocation to equities in 2013.

In particular, investors based in the UK, Switzerland and Italy showed the most enthusiasm towards boosting asset allocation in equities.

Despite the reduction of tail risk in Europe and signs of recovery in the US, 28% of responses believed emerging market equities will be the best performers in the next 12 months while 24% agreed the US will be a top performing market.

This was followed by Asia ex-Japan at 18%. Further down the rankings, 14% of those surveyed believed the European periphery will perform better than the European core (10%).

Japan was least favoured at 6%.

Cesar Perez, chief investment strategist for J.P. Morgan Private Bank in EMEA said: “We believe 2013 will be led much more by fundamentals than political, event or tail risk. Global growth is likely to improve in the second half of the year, though we expect to remain below trend at around plus 3 per cent. All-in-all, 2013 is not the year to be out of the markets as we return to a more normalised market environment with less volatility, correlation and systemic risk. Europe is far from being “fixed,” but better financial conditions are already benefitting the global economy.”

He added: “Europe in particular appears inexpensive on a valuation basis. While equity risk premium associated with European stocks remains high, we believe that in the near term, it is high for a reason. Throughout 2013, we will be looking closely at Europe for potential investment opportunities.”


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