Corbin Advisors Finds 90% of Surveyed Investors Consider Equity Markets Fairly to over Valued
- Heading into 3Q16 earnings season, 78% of surveyed investors expect performance to be in line or better than consensus; just 22% expect earnings misses, down from 39% last quarter
- Investors largely expect organic growth and margin stabilization and EPS improvement
- With views that equity valuations are nearing or at frothy levels, 58% report that buybacks are not a good use of excess free cash
- In a significant shift, investor sentiment has improved on emerging market economies excluding China
- Interest rate-sensitive sectors such as Consumer Staples and Utilities are out-of-favor after last quarter’s bullishness; Technology returns to lead positive sentiment while Biotech registers the largest spike in positive investor conviction
- U.S. Presidential candidate Donald Trump continues to be seen as detrimental to equity markets by the majority of surveyed investors
HARTFORD, Conn. – October 5 2016 – Corbin Advisors, a leading investor research and investor relations (IR) advisory firm, today released its quarterly research report, Inside The Buy-side®, a global survey that captures trends in institutional investor sentiment heading into public company earnings season. The poll is based on responses from 89 institutional investors globally managing over $1.1 trillion in assets.
Our survey finds that although investors expect third quarter fundamentals to have stabilized or improved quarter-over-quarter and sentiment has ticked up, persistent concerns about a slow growth environment and central bank policy as well as new concerns about private debt levels and consumer confidence are mounting. “My market sentiment is neutral because of uncertainty over the macro environment, monetary policy and geopolitical outcomes,” commented Martin Crabb, Director of Research at Shaw and Partners Limited.
Survey findings also reveal that executive tone is perceived as more downbeat with just over 35% of investors describing management as cautiously optimistic compared to nearly 50% last quarter.
“Market psychology is a major factor in understanding the current landscape in that expectations have been reset and we are operating in a “New Normal”. Investor sentiment warmed somewhat this quarter and equities are trading at elevated levels given a dearth of attractive investment alternatives. Still, the economic landscape has not improved and growth continues to become more elusive,” commented Rebecca Corbin, Founder and CEO of Corbin Advisors.
Continuing, amid signals of a rate hike, investor views on rate-sensitive sectors such as Consumer Staples and Utilities weakened while Technology overtook Consumer Staples to regain its top spot among bulls and Biotech saw the greatest spike in positive sentiment.
Investors’ anticipation of a recession remained steady from the previous quarter with 55% expecting economic contraction in either 2017 or 2018. Underscoring this concern, the majority, or 70%, continue to place emphasis on corporate balance sheets when evaluating investments.
Turning to the global landscape, several emerging markets are predicted to improve in the near-term, with Southeast Asia, India and Brazil leading the way. Sentiment on China’s prospects is divided, with slightly more, 39%, expecting the Country’s economy to worsen and citing fears for a “hard landing.” Views on the Eurozone have improved with just 20% expressing concern over the Brexit fallout while sentiment toward Japan remains downbeat.
Finally, regarding the contentious U.S. Presidential election, 75% see a Donald Trump presidency as negative or very negative to equities versus just 26% for Hillary Clinton.
Since 2006, Corbin Advisors has tracked investor sentiment on a quarterly basis. Inside The Buy-side® and other research on real-time investor sentiment, IR best practices and case studies are available at CorbinAdvisors.com.
About Corbin Advisors
We are Corbin Advisors, a leading investor research and investor relations advisory firm that specializes in shareholder value creation.
We leverage our broad company and industry experience, knowledge of best practices and benchmarking capabilities to provide research-driven counsel that enables our clients, publicly-traded companies across diverse industries, to positively differentiate their company in the market. We bring a unique perspective to our engagements, one that is based on a proven methodology and customized approach.
Our industry-leading research, Inside The Buy-side®, is covered by news affiliates globally and regularly featured on CNBC.
To learn more about us and our impact, visit our website at CorbinAdvisors.com
Bronwyn Swanson, 203-283-7997