Investors expect slump by 2019
Seven out of ten institutional investors anticipate a global stock market crash of at least 10% within the next 18 months and almost half of respondents believe that a crash could happen within a year, according to a recent survey commissioned by Managing Partners Group.
Almost a third of respondents predict stock markets could crash by up to 30% while 36% expect a drop of between 10% and 15% and 28% anticipate the fall to be between 15% and 20%.
While respondents were overwhelmingly bearish on the outlook for equities, they remain divided on the factors which could cause a potential recession. About 40% of respondents state that equities are currently overpriced, about a third of respondents think a stock market could be caused by either a black swan event, geopolitical crises or a hike in interest rates.
The cautious outlook somewhat contradicts with asset allocation strategies as only 20% of respondents state that they have already adjusted their portfolio to a potential crisis scenario while another 37% state that they plan to do so in the near future. Those surveyed who have already adjusted their portfolios state that they reduced their equity exposure, 40% of respondents have raised their exposure to cash, 50% to alternatives such as hedge funds and 40% to real estate.
The survey is based on a poll among 54 institutional investors globally.