Global Market Sentiment Survey 2014 Results - CFA Institute

GLOBAL MARKET SENTIMENT SURVEY 2014 DETAILED SURVEY RESULTS December 2013

TABLE OF CONTENTS EXECUTIVE SUMMARY FULL RESULTS 1. INVESTMENT PROFESSIONALS INCREASINGLY CONFIDENT GLOBAL AND LOCAL ECONOMIES WILL GROW IN 2014 2. POLITICAL INSTABILITY AND THE END OF QUANTITATIVE EASING BRING UNCERTAINTY TO LOCAL MARKETS 3. MEMBERS CALL FOR GLOBAL OVERSIGHT AND LOCAL ENFORCEMENT 4. LACK OF ETHICAL CULTURE IN FINANCIAL FIRMS ERODING INVESTOR TRUST

ABOUT THIS STUDY

CFA Institute

EXECUTIVE SUMMARY CFA Institute members report greater optimism over economic prospects for the coming year, with an especially dramatic turn in sentiment from European members compared to last year. But these same investment professionals do not express confidence that the integrity of capital markets is improving. As markets rebound, CFA Institute is working to ensure that attention does not shift away from meaningful reforms that might restore investor trust and strengthen the financial system’s ability to resist shocks in the future.

CFA Institute

Global Market Sentiment Survey 2014

3

INVESTMENT PROFESSIONALS INCREASINGLY CONFIDENT GLOBAL AND LOCAL ECONOMIES WILL GROW IN 2014 Economic turnaround in Europe is reflected in greater optimism about the worldwide economy, tempered by concerns over political instability

CFA Institute

IN 2014, DO YOU EXPECT THE GLOBAL ECONOMY TO: Global

AMER

APAC

EMEA

69% 63%

62% 56%

31% 27%

27% 23%

12% 9%

9% 6%

Expand

Stay roughly the same

Contract “Not Sure” option not displayed

CFA Institute


5

IN 2014, DO YOU EXPECT THE GLOBAL ECONOMY TO: Expand Global


Contract

63%

27%

United Kingdom

9%

78%

Brazil

16%

74%

Germany

24%

70%

South Africa

65%

Switzerland

64%

6%

23%

5%

25% 21%

9% 12%

Canada

62%

27%

10%

USA

62%

28%

9%

Japan

61%

Australia

59%

Singapore

59%

India Hong Kong China

34%

4%

31%

8%

28%

56%

12%

31%

54%

29%

48%

34%

12% 15% 12%

“Not Sure” option not displayed CFA Institute


6

IN 2014, DO YOU EXPECT THE GLOBAL ECONOMY TO: 2012

2013

2014

69% 63%

62% 56% 50%

40% 34%

42%

41%

39% 36%

38% 32%

38% 34%

38% 35%

27%

25%

30% 27%

35% 34% 31% 23%

29%

27% 20%

27% 24%

22%

12% 9%

14%

9% 6%

Global

AMER

APAC

Expand

EMEA

Global

AMER

APAC

EMEA


Global

AMER

APAC

EMEA


CFA Institute


7

IN 2014, DO YOU EXPECT YOUR LOCAL ECONOMY TO: Local aggregate

57%

AMER

APAC

EMEA

59% 56% 52%

33%

32%

34%

34%

13% 9%

Expand


8%

9%


CFA Institute


8

IN 2014, DO YOU EXPECT YOUR LOCAL ECONOMY TO: Expand Local aggregate


57%

33%

United Kingdom

74%

Japan

73%

Germany

62%

India

61%

Switzerland

52%

Brazil

51%

Canada

47%

Singapore

47%

South Africa

46%

China

45%

3%

21%

5%

33%

1%

29%

8%

28%

56%

Australia

9% 22%

65%

USA

Hong Kong

Contract

9%

38% 32%

5% 15%

43%

6%

43%

9%

41%

11%

40% 34%

37%

44%

14% 18% 18%

“Not Sure” option not displayed CFA Institute


9

IN 2014, DO YOU EXPECT YOUR LOCAL ECONOMY TO: 2012

2013

2014

59%

57%

56% 52%

45% 42%

49% 46%

47% 46% 40% 38% 33%

44% 42%

41% 37%

33%

36% 34% 32%31%

34% 30%

24%

24% 21% 17% 16% 9%

Local aggregate

AMER

APAC

Expand

EMEA

Local aggregate

AMER

APAC

EMEA


Local aggregate

12%13%

16% 13% 9%

8%

AMER

APAC

EMEA


CFA Institute


10

WHAT DO YOU SEE AS HAVING THE BIGGEST POSITIVE IMPACT ON GLOBAL CAPITAL MARKETS IN 2014?* Global

AMER

APAC

EMEA

38% 34% 32% 29%

28% 26%

26% 22%

22%22% 21% 20%

10% 8% 4%

5%

5% 5%

5% 5% 5% 5% 2% 2%

Increased focus Growth rates Increased focus Reducing tax on among emerging on solutions to rates on income resolving/easing economies create more jobs and capital gain global sovereign debt challenges CFA Institute

Increased market transparency


3%

2%

Improved regulation

2%

1%

2%

5% 3%

1%

Improved enforcement of existing regulation

Other

*“No opinion” option excluded from results. 11

WHAT DO YOU SEE AS HAVING THE BIGGEST POSITIVE IMPACT ON GLOBAL CAPITAL MARKETS IN 2014?* Increased focus on resolving/easing global sovereign debt challenges Growth rates among emerging economies Increased focus on solutions to create more jobs Global

32%

26%

Brazil

49%

Germany

45%

India

44%

Switzerland

43%

Australia

22%

35%

United Kingdom

35%

Canada

34%

China

34%

South Africa

34%

Singapore

24%

30%

19%

24%

24%

23%

26%

25%

18%

29% 21%

22% 15%

26% 28%

27% 14%

12%

22%

30%

USA

8%

22%

37%

Hong Kong

Japan

21%

28% 44%

21% 22% 21% 24% *Displaying top three positive impacts on global capital markets.

CFA Institute

“No opinion” option excluded from results. Global Market Sentiment Survey 2014

12

EQUITIES EXPECTED TO PROVIDE THE HIGHEST RETURN AMONG ASSEST CLASSES IN 2014

CFA Institute

RANK THE FOLLOWING ASSET CLASSES IN ORDER OF EXPECTED TOTAL RETURN IN THE GLOBAL MARKETS IN 2014* Global

71% 71%

AMER

APAC

EMEA

71% 68%

10% 11% 10% 11%

Equities

Commodities

9% 9% 8% 9%

Precious metals

6% 5% 7% 6%

Cash

7% 4% 4%

4%

Bonds

*Chart displaying proportion of members ranking the asset class as likely to have the highest expected return. CFA Institute


14

RANK THE FOLLOWING ASSET CLASSES IN ORDER OF EXPECTED TOTAL RETURN IN THE GLOBAL MARKETS IN 2014* Equities

Commodities

Global

Precious metals

Cash

Bonds

71%

Japan

10%

9%

80%

United Kingdom

77%

Singapore

76%

5%

6%

7% 1% 6%

9%

7% 2% 6%

8%

6%

Australia

75%

Switzerland

74%

USA

73%

10%

9%

South Africa

73%

10%

10%

Hong Kong Canada

5%

69% 61%

Brazil

55%

India

54%

11% 13%

9%

13%

9%

9% 13% 11%

5% 1% 5% 3% 5% 2%

8% 11%

4%

3% 3%

10%

11%

10%

6%

9%

10%

69%

Germany China

11%

71%

4%

7% 5% 3% 7%

9%

11%

12%

10%

8%

3%

14%



15

RANK THE FOLLOWING ASSET CLASSES IN ORDER OF EXPECTED TOTAL RETURN IN THE GLOBAL MARKETS IN 2014* 2012

2013

2014

71%

50% 41%

25% 22% 15% 16% 10%

9%

10%

9% 4%

Equities

Commodities

Precious metals

Cash

6%

8% 4%

Bonds



16

UNITED STATES AND CHINA CONTINUE TO PROVIDE THE BEST INVESTMENT OPPORTUNITIES

CFA Institute

WHICH EQUITY MARKET DO YOU THINK WILL PROVIDE THE BEST INVESTMENT OPPORTUNITY IN 2014?* Global

26%

10% 6% 6%

5% 3% 3% 3% 3%

2% 2% 2% 2% 2% 2% 2%

1% 1% 1% 1% 1% 1% 1% 1% 1% 1%

*Chart shows proportion of members picking the market as the best investment opportunity CFA Institute


18

WHICH EQUITY MARKET DO YOU THINK WILL PROVIDE THE BEST INVESTMENT OPPORTUNITY IN 2014?* Global

AMER

APAC

EMEA

31%

26%

25%

20%

16%

10%

9%

10% 8% 6%

5%

6%

6%

6%

7% 5%

5%

6%

6%

1% USA

China

Japan

Germany

Brazil

*Chart shows proportion of members picking the market as the best investment opportunity (top 5 displayed) CFA Institute


19

INVESTMENT SERVICES JOB MARKET OUTLOOK

CFA Institute

IN 2014, DO YOU EXPECT EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS IN YOUR LOCAL MARKET TO INCREASE, DECREASE, OR STAY ABOUT THE SAME? Local aggregate

AMER

APAC

EMEA

53% 50% 46% 44%

33% 28% 26%

27%

27% 23%

22% 20%

Increase

Stay about the same

Decrease “Not Sure” option excluded

CFA Institute


21

IN 2014, DO YOU EXPECT EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS IN YOUR LOCAL MARKET TO INCREASE, DECREASE, OR STAY ABOUT THE SAME? Increase Local aggregate

28%

22%

55%

China

30%

48%

United Kingdom 30%

Australia

30%

USA

29%

Singapore

17%

South Africa

16%

Switzerland

16%

21%

38%

32% 52%

19%

50%

24%

54%

19%

Brazil

12%

49%

21%

17%

17%

43%

27%

Canada

15%

35%

45%

India

Germany

Decrease

50%

Japan

Hong Kong

Stay about the same

25%

50%

30%

60%

22%

53%

31% 69%

38%

14% 46%

“Not Sure” option excluded CFA Institute


22

IN 2014, DO YOU EXPECT EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS IN YOUR LOCAL MARKET TO INCREASE, DECREASE, OR STAY ABOUT THE SAME? 2012

51%

2013

49%

2014

50%

35%

33%

28% 22% 17% 14%

Increase

Stay about the same

Decrease “Not Sure” option excluded

CFA Institute


23

POLITICAL INSTABILITY AND THE END OF QUANTITATIVE EASING BRING UNCERTAINTY TO LOCAL MARKETS Investment professionals in some major markets point towards political instability and unrest in the Middle East to impact local performance

CFA Institute

WHAT DO YOU SEE AS THE BIGGEST RISK TO GLOBAL CAPITAL MARKETS IN 2014? Global

AMER

APAC

EMEA

33% 32% 31% 28% 27% 25% 24% 23%

23%

21% 20% 18%

13% 13% 13% 12%

7% 6% 5%

5% 4%

4% 4%

4%

2% 2% 2% 2%

Weak economic conditions

CFA Institute

Political instability

Systemic disruptions

Growth rates among emerging economies

Excess regulation


Weak regulation

Other

"No opinion” option excluded from results. 25

WHAT DO YOU SEE AS THE BIGGEST RISK TO GLOBAL CAPITAL MARKETS IN 2014?* Weak economic conditions Global

31% 44%

India

32%

Hong Kong

32%

Canada

12%

21% 18%

23%

29%

28%

27%

28%

22% 15%

17%

32%

23%

Switzerland

19%

22%

24%

United Kingdom

19%

27%

29%

Australia

Japan

13%

30%

Singapore

26%

14%

36%

USA

13%

6%

39%

Brazil

20% 19%

43%

South Africa


25%

China

Germany


24%

30% 25%

21% 34%

43%

12% *Displaying top three risks to global markets. “No opinion” option excluded from results.

CFA Institute


26

WHAT DO YOU SEE AS THE BIGGEST RISK TO YOUR LOCAL MARKET IN 2014? Local aggregate

AMER

APAC

EMEA

33% 31% 31%

31% 28%

28%

24% 24%

18% 17% 16% 15% 12% 10%

10% 9% 8%

7%

7% 6%

6%

6%

5%

5% 5% 4% 3% 1%

Weak economic conditions

CFA Institute


Excess regulation


Growth rates among emerging economies


Weak regulation

Other

“No opinion” option excluded from results. 27

WHAT DO YOU SEE AS THE BIGGEST RISK TO YOUR LOCAL MARKET IN 2014?* Weak economic conditions Local aggregate

31%

28%

Australia

5%

41%

Japan

30%

Brazil

29%

USA

28%

Singapore

16% 9%

22%

Switzerland

21% 19% 15%

13%

8% 18%

37%

18%

2% 5%

24%

Germany

16%

38%

26%

Hong Kong

9%

13%

33%

China

India

2% 7%

43%

United Kingdom

Excess regulation

15%

49%

Canada

South Africa


21% 12% 5%

6% 31% 43% 53%

6% 78%

3% *Displaying top three risks to local markets.

CFA Institute


“No opinion” option excluded from results.

28

WHAT IMPACT, IF ANY, WILL THE FOLLOWING HAVE ON YOUR LOCAL MARKET IN 2014: Scale: Negative impact, No impact, Positive impact and Don’t know 79% 71%

68% 60%

59%

39%

37%

35% 26%

12% 13%

Effects on energy prices caused by unrest in Middle East

Don’t know

2% Negative impact

Don’t know

Positive impact

No impact

Negative impact

Don’t know

Positive impact

No impact

Negative impact

Don’t know

Positive impact

No impact

Negative impact

11%

4%

2% Don’t know

Positive impact

No impact

3% Negative impact

Don’t know

Positive impact

No impact

4% Negative impact

Don’t know

Positive impact

No impact

Negative impact

13%

8%

5%

CFA Institute

15%

13%

Central banks attempts to end quantitative easing

26%

22%

Positive impact

14% 12%

22%

No impact

23%

Fallout from rigging Growth of non-bank Political stability in Progress of recovery Progress of recovery of benchmark rates lending or shadow your home market in China in Europe banking sector


29

WHAT IMPACT, IF ANY, WILL THE FOLLOWING HAVE ON YOUR LOCAL MARKET IN 2014: Scale: Negative impact, No impact, Positive impact and Don’t know AMER

APAC

EMEA

87%

72% 68% 65%

80% 75%

78%

75%

69%

68%

52% 43%

72%

51% 46%

39%

25% 22% 22% 18%

17% 13% 13% 11%

10% 6%

20%

28% 26% 22%

30% 23% 23% 13% 13% 10%

7% 3%

9%

7%8%

3%

Negative Positive Negative Positive Negative Positive Negative Positive Negative Positive Negative Positive Negative Positive impact impact impact impact impact impact impact impact impact impact impact impact impact impact Central banks attempts to end quantitative easing

Effects on energy prices caused by unrest in Middle East

Fallout from rigging Growth of non-bank Political stability in Progress of recovery Progress of recovery of benchmark rates lending or shadow your home market in China in Europe banking sector

“No impact” and “Don’t know” option not displayed CFA Institute


30

IN THE COMING 12 MONTHS, DO YOU ANTICIPATE A FINANCIAL BUBBLE IN YOUR LOCAL MARKET AND IF SO, WITHIN WHICH ASSET CLASS? Local aggregate

AMER

APAC

EMEA

52%

51%

50%

47%

32% 30% 26%

16%

15% 13% 10% 7%

13% 10% 7% 4%

Real estate

CFA Institute

Equities

Bonds

1% 1% 2% 1%

1% 1% 1% 1%

1% 1% 1% 1%

1% 2% 1% 1%

Precious metals

Commodities

Cash

Other


Do not anticipate a financial bubble

31

IN THE COMING 12 MONTHS, DO YOU ANTICIPATE A FINANCIAL BUBBLE IN YOUR LOCAL MARKET AND IF SO, WITHIN WHICH ASSET CLASS? Real estate Local aggregate

Bonds

Precious metals

26%

13%

Brazil

10%

67%

South Africa

5%

52%

Japan

19%

23%

Australia

38%

Switzerland

38%

Germany

34%

India

31%

United Kingdom

34%

5% 16%

8% 13%

48% 51% 59% 68% 77%

5%

5% 3%

47%

23% 14%

5%

50%

28%

Hong Kong

14%

43%

31%

Singapore

7% 16%

12%

43%

1%

27%

9%

45%

Canada

1%

32%

59%

USA

China

Equities

8% 9%

2% 5%

6%

5%

5% 4% 5% 3%

*Displaying top four response options CFA Institute


32

MEMBERS CALL FOR GLOBAL OVERSIGHT AND LOCAL ENFORCEMENT Globally, members cite improved regulation and oversight of global systemic risks as the most important action needed in 2014 to build investor trust and market integrity. At the local level members say better enforcement of existing laws and stronger corporate governance standards are the steps needed to improve market integrity

CFA Institute

HOW WOULD YOU RATE THE LEVEL OF INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2013? Scale: Poor (1) to Excellent (5) Global 56%

AMER 57%

APAC 56%

EMEA 56%

26% 22%

23% 21%

21%

22%

21% 18%

Poor (1 + 2)

3

Excellent (4+5) Chart displays Poor(1+2), 3 and Excellent (4+5)

CFA Institute


34

HOW WOULD YOU RATE THE LEVEL OF INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2013? Scale: Poor (1) to Excellent (5) Poor (1 + 2) Global

3

Excellent (4+5)

22%

Switzerland

56%

21%

32%

India

56%

28%

12%

55%

17%

Germany

26%

53%

21%

Australia

25%

54%

21%

Singapore

25%

53%

22%

Japan

24%

52%

United Kingdom

23%

55%

USA

22%

Canada

20%

South Africa

19%

Hong Kong

18%

Brazil China CFA Institute

55%

16% 13%

24% 22% 23%

60% 59% 56% 60% 61% Global Market Sentiment Survey 2014

19% 23% 27% 23% 26% 35

HOW WOULD YOU RATE THE LEVEL OF INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2013? Scale: Poor (1) to Excellent (5) 2012

2013 56%

54%

26% 22%

Poor (1 + 2)

20%

3

21%

Excellent (4+5) Chart displays Poor(1+2), 3 and Excellent (4+5)

CFA Institute


36

DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2014 WILL BE BETTER OR WORSE THAN IN 2013? Global

AMER

APAC

EMEA

71% 68%

67% 61%

32% 27%

26% 23%

6%

Better CFA Institute

About the same Global Market Sentiment Survey 2014

6%

7%

6%

Worse 37

DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2014 WILL BE BETTER OR WORSE THAN IN 2013? Better Global

68%

6%

39%

Australia

56%

36%

India

57%

34%

Brazil

32%

United Kingdom

32%

Japan

29%

South Africa

28%

Singapore

27%

57% 64% 62%

23%

Switzerland

23%

USA

22%

Hong Kong

22%

5% 7% 8% 4% 6%

70% 67% 66%

24%

Canada

CFA Institute

Worse

26%

China

Germany

About the same

69% 71% 69% 71% 70% Global Market Sentiment Survey 2014

1% 5% 6% 6% 6% 8% 6% 8% 38

DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN (UPCOMING YEAR*) WILL BE BETTER OR WORSE THAN IN (CURRENT YEAR**)? 2012

2013

2014

67%

68%

56%

26%

26% 22%

22%

7%

Better

About the same

6%

Worse

*Upcoming year displayed the future year (e.g. 2014) **Current year displayed the present year (e.g. 2013) CFA Institute


39

WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED IN THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY? GLOBALLY

IN LOCAL MARKET

30% 29%

24% 21%

17%

17% 16% 15%

11% 10%

6% 5%

Improved regulation Improved transparency Improved corporate Improved enforcement and oversight of global of financial reporting governance practices of existing laws and systemic risk and other corporate regulations disclosures CFA Institute


Improved market trading rules on transparency and frequency of trades

Improved auditing practices and standards 40

WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED GLOBALLY IN THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY? Global

29%

21%

India

48%

China

17%

16%

11%

46%

15%

15%

40%

9%

Singapore

39%

13%

South Africa

38%

13%

19%

Brazil

37%

15%

16%

Germany

36%

12%

Australia

32%

United Kingdom

32%

13%

Japan

30%

15%

Canada

29%

16%

Switzerland

29%

USA CFA Institute

22%

17%

28%

9% 15%

18%

23% 16%

13%

6%

8%

11% 1%

20%

18% 18% 16%

8%

10% 3%

16%

10%

4%

11% 4%

20%

22%

18%

7%

16%

21%

19%

13%

13%

17%

6%

6% 6%

14%

19%

18%

12%

13%

11%

Hong Kong

11%

10% 4% 18% 15% 15% 11%


Improved regulation and oversight of global systemic risk Improved transparency of financial reporting and other corporate disclosures Improved corporate governance practices Improved enforcement of existing laws and regulations Improved market trading rules on transparency and frequency of trades Improved auditing practices and standards

8% 5% 4% 7% 41

WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED IN YOUR LOCAL MARKET FOR THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY? Local aggregate

30%

Brazil

24%

17%

41%

15%

24%

17%

China

34%

Canada

33%

India

32%

South Africa

32%

United Kingdom

31%

24%

Australia

30%

27%

14%

Germany

30%

27%

13%

USA

30%

14%

27%

22%

10% 5% 7% 3% 8%

12%

16%

31%

5% 8%

15% 20%

9% 4% 4% 5% 8%

Improved enforcement of existing laws and regulations Improved corporate governance practices

Switzerland Hong Kong Singapore Japan CFA Institute

24%

19%

23%

16% 11%

31% 23%

19% 48%

12%

9% 10%

16%

31%

21%

16%

13% 10% 21%

17%

10%

20%

9%

20% 13%

10% 17%

6%

12% 4% 15%

4%

10% 4% 16% 10% 15%

13%

8% Improved transparency of financial reporting and other corporate disclosures Improved market trading rules on transparency and frequency of trades Improved regulation and oversight of global systemic risk Improved auditing practices and standards

3% 9% 7%

5% 11%


42

IN YOUR OPINION, IS EACH OF THE FOLLOWING REGULATORY REFORMS MORE LIKELY TO: Scale: Have no impact, Prevent future financial crises, Result in unintended negative consequences and No opinion Global 73%

68%

68%

66% 53%

51%

49%

46% 40% 34%

33% 27%

Require Banks Increased More Increased bank Proposals like Proposals for to impair global standardized capital and the Volcker ring-fencing troubled credit coordination of contracts with liquidity Rule to limit retail banking holdings on a monitoring of increased requirements bank proprietary activities more consistent systemic risks central clearing trading and timely basis

Designation of “too big to fail” institutions for closer monitoring

Negative consequences

Prevent future crises












12%



12%



24%

20%

16%


27%

Increased Reduce reliance regulatory on and monitoring of reference to hedge funds credit-ratings agency ratings

“Have no Impact” option not displayed “No opinion” option excluded CFA Institute


43

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Local aggregate

AMER

APAC

EMEA

32% 30%

25% 23%

24%

24%

23% 21%

21%

20%

16%

15% 13% 11% 9%

15%

14% 12% 9%

10%

10%

9%

7%

Mis-selling by financial advisers

Market fraud

Market trading practices

Integrity of financial reporting

Disclosure/use of financial derivatives

8%

Investment management services/structure

*Chart displaying proportion of members ranking the ethical issue as the most serious facing their local market. CFA Institute


44

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Mis-selling by financial advisers Local aggregate

25%


24%

South Africa

16%

53%

Australia

11%

48%

Germany

12%

40%

Canada

34%

Switzerland

34%

United Kingdom

India

20%

Brazil

6%

28%

4%

30% 27%

10% 7%

23%

24%

14% 8%

12% 34%

22%

USA

12%

21%

25%

Hong Kong

14%

13%

27%

Singapore

14%

17%

30%

2% 12%

12%

31%

Japan

China

Market fraud

52% 55%

2% 5%

*Chart displaying the top three ethical issues facing local market (based on global rankings) CFA Institute


45

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* 2012

2013

2014

29% 25% 24% 22% 19% 18% 16%

16%

14%

13%

16%

15%

15%

13% 12% 12%

11% 10%


Market fraud





*Chart displaying proportion of members ranking the ethical issue as the most serious facing their local market. CFA Institute


46

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Global

27%

AMER

APAC

EMEA

27%

24%

24% 21%

21%

21% 20%

20% 18%

18% 17% 16%

16%

16% 15% 15% 12%

12% 11% 9% 8% 6% 5%

Market fraud






*Chart displaying proportion of members ranking the ethical issue as the most serious facing global markets. CFA Institute


47

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Market fraud Global

24%

Singapore

26%

Hong Kong

26%

United Kingdom

26%

Canada

China India

22% 20%

16%

19%

16%

22%

19%

16%

19% 13% 12%

19% 16% 15%

14%

18% 17%

18%

22%

23%

Germany

20% 26%

24%

Switzerland

22%

15%

28%

Brazil

Australia

20% 15%

29%

USA


21% 30%

Japan

South Africa


28% 24%

17% 21%

16% 32% 34%

*Chart displaying the top three ethical issues facing global markets (based on global rankings) CFA Institute


48

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* 2012

2013

2014

24% 23% 21% 21%

20%

21%

20%

19% 16% 16% 16%

15%

15% 13%

12%

12%

8% 6%

Market fraud






*Chart displaying proportion of members ranking the ethical issue as the most serious facing global markets. CFA Institute


49

LACK OF ETHICAL CULTURE IN FINANCIAL FIRMS ERODING INVESTOR TRUST To rebuild the confidence of investors in the financial sector, ethical conduct cannot simply be legislated or taken for granted; it must be fostered and encouraged by an ethical culture at the firm-level

CFA Institute

WHICH FACTOR DO YOU THINK HAS CONTRIBUTED THE MOST TO THE CURRENT LACK OF TRUST IN THE FINANCE INDUSTRY? Global

AMER

APAC

EMEA

61% 56% 54% 51%

16% 13% 12% 7%

12% 10%10% 9%

7% 7%

9%

10%11% 7% 4% 3%

Lack of ethical culture within financial firms

Market disruptions Poor government enforcement (failed IPO’s, flash crash etc.)

Poor government regulation

4% 5%

6%

8%

2% 2% 2% 2%

Lack of staff I don’t think there is training and a lack of trust in the education within finance industry. financial firms

Other

“No opinion” option excluded from results. CFA Institute


51

WHICH FACTOR DO YOU THINK HAS CONTRIBUTED THE MOST TO THE CURRENT LACK OF TRUST IN THE FINANCE INDUSTRY?* Lack of ethical culture within financial firms Global

54%

13%

Switzerland

2% 5%

63%

India

62%

Japan

60%

South Africa

60%

United Kingdom

60%

Germany

4%

52%

Hong Kong

52%

9%

11%

13%

7% 9% 11%

10%

12%

54%

Brazil

13%

7%

55%

Australia

7%

10%

58%

Canada

China

10%

71%

Singapore

USA

Poor government enforcement

Market disruptions (failed IPO’s, flash crash etc.)

11% 12%

11% 8% 7%

20%

49%

9%

17%

43%

15%

10% 17%

*Displaying top three factors contributing to the current lack of trust in the finance industry. CFA Institute


“No opinion” option excluded from results.

52

WHICH ONE OF THE FOLLOWING FIRM LEVEL ACTIONS IS MOST NEEDED IN THE COMING YEAR TO HELP IMPROVE INVESTOR TRUST AND CONFIDENCE? Global

40%

39%

AMER

APAC

EMEA

40% 40%

28% 26%

25% 25%

13% 13%

14%

13%

14% 12%

12% 9% 6%

7%

8%

5% 2%

Improved culture established and encouraged by top management and executives CFA Institute

Increased adherence to ethical codes and standards

Improved compensation practices

Clarification of fiduciary duty responsibilities

Increased staff training and education

3% 1%

2%

Other

“No opinion” option excluded from results. Global Market Sentiment Survey 2014

53

WHICH ONE OF THE FOLLOWING FIRM LEVEL ACTIONS IS MOST NEEDED IN THE COMING YEAR TO HELP IMPROVE INVESTOR TRUST AND CONFIDENCE? Global

40%

Singapore

49%

Germany

44%

South Africa

44%

Japan

43%

Switzerland

43%

United Kingdom

43%

Australia

42%

USA

39%

Hong Kong

38%

India

36%

Brazil

34% 30%

13%

20%

46%

Canada

China

26%

16%

24%

15%

27%

20%

10%

20% 25% 23%

30%

12%

6%2%

10%

8%1%

9%

15%

14%

15%

5%3%

8% 3%

12%

14%

5%3%

14%

15%

17%

10%

Increased adherence to ethical codes and standards Improved compensation practices Clarification of fiduciary duty responsibilities Increased staff training and education Other

7%1%

18% 15%

Improved culture established and encouraged by top management and executives

8%1%

15% 8%

13%

11% 1%

10% 6%3%

16%

37% 29%

6% 7%1%

18%

23%

6%2%

7% 10% 3%

11%

22%

18%

12%

3%

10% 2% “No opinion” option excluded from results.

CFA Institute


54

ABOUT THIS STUDY

ABOUT THIS SURVEY The CFA Institute Global Market Sentiment Survey was created to seek input from CFA Institute members and gather feedback on market sentiment, performance, and market integrity issues, and to further our mission of promoting ethical and trustworthy investment markets.

METHODOLOGY An online survey was conducted from 2 to 17 October 2013. All CFA Institute members globally (119,817) were invited to participate in the survey; 6,561 responded, for an overall response rate of 5.5% and a margin of error of ±1.8%. In addition to analysis and reporting at the global and regional level, 13 market-specific reports are also included.

CFA Institute


56

RESPONDENT PROFILE

TOP MARKETS USA

59% AMER

CFA Institute

17% EMEA

24% APAC


# OF RESPONDENTS 2,906

CANADA

738

UNITED KINGDOM

302

HONG KONG

185

SWITZERLAND

172

GERMANY

167

CHINA

162

INDIA

162

AUSTRALIA

159

SINGAPORE

137

SOUTH AFRICA

105

BRAZIL

95

JAPAN

87

57

RESPONDENT PROFILE

Primary Investment Practice (Top 5) 34%

Years In Industry ≤ 5 years

6 to 10 years

11 to 15 years

16 to 20 years

>20 years

Not Applicable 17%

3%

4%

13%

3%

3%

Derivatives

Real Estate

21% Equities

Fixed Income Private Equity

Job Function (Top 6)

31%

14%

19% 14%

18%

Portfolio Manager CFA Institute

Research Analyst


6%

6%

6%

Financial Advisor

Consultant

Corporate Financial Analyst

4%

Risk Manager 58

ABOUT CFA INSTITUTE CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors’ interests come first, markets function at their best, and economies grow. CFA Institute has more than 119,000 members in 140 countries and territories, including 112,000 CFA charterholders, and 137 member societies. For more information, visit www.cfainstitute.org. QUESTIONS? Media inquiries: J.D. McCartney Director, Public Relations, The Americas [email protected]

LEARN MORE ABOUT THIS STUDY ON OUR WEBSITE AT: www.cfainstitute.org/gmss

Survey inquiries: Prashant Goswami Analyst, Market Intelligence [email protected] CFA Institute


59

Global Market Sentiment Survey 2014 Results - CFA Institute

Global Market Sentiment Survey 2014 Results - CFA Institute

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