After several quarters of lowered expectations, investors anticipate third quarter 2016 earnings to be in line or better than consensus, albeit based on ‘low bar’ expectations, according to the 3Q 16 Corbin Perception report.
The report reveals that margin and growth outlooks have largely stabilized and 45 percent expect EPS growth to improve quarter on quarter.
While investor sentiment marked up this quarter, there are concerns around slowing global growth and the consumer. Management tone is described as more cautious.
Investors are more optimistic on emerging market economies following several quarters of bearishness with the most bullish cited as Southeast Asia and India (the survey was prior to India’s Central Bank rate cut, which cited cooling global growth) and the most bearish: China and Japan.
Investors are once again bullish on tech and healthcare, while biotech saw the biggest spike in sentiment, with views divided on financials, energy and industrials.
In politics, with two debates done, fears about Donald Trump in the White House are prominent and findings continue to indicate that a Trump win would be negative for markets: 33 percent say ‘very negative’ and 42 percent ‘negative’.
Asked, ‘how concerned are you about the Brexit fallout,’ only two percent say they were ‘very concerned’, but when added with ‘concerned’ (18 per cent) this presents a slightly different picture, with 29 percent ‘not concerned’ and 33 percent ‘somewhat concerned’.
A European sell side generalist is quoted as saying: ‘The turmoil of Brexit is gone. I see problems in German and Italian banks but the economy is slightly improving thanks to a low interest rate environment.’
The survey covered 89 investors globally managing over $1.1 tn in assets.
