Annual CFA Institute survey reveals Canadian members more optimistic
about global economy, need for culture shift in finance
TORONTO, Dec. 10, 2012 /CNW/ - Investment professionals across Canada
and worldwide are more optimistic than last year about global economic
growth heading into the new year, according to the CFA Institute 2013 Global Market Sentiment Survey. A greater number of those surveyed (40 percent) believe the global
economy will expand in 2013, a six point increase from last year's
poll. However, CFA Institute members believe there is much work to be
done to restore financial market integrity. Citing an overwhelming lack
of trust in finance, members think the primary fix is to encourage a
culture of ethics and integrity inside financial firms. The annual
survey measured the opinion of 6,783 CFA charterholders and members; to review the complete report and survey
results, visit www.cfainstitute.org/gmss.
"There is mounting optimism around global economic growth from both
investors and the financial industry, despite ongoing issues like the
European sovereign debt crisis and significantly greater concern about
mis-selling," said Kurt Schacht, CFA, managing director of standards
and financial market integrity at CFA Institute. "We've seen the
industry become more vocal about the behaviour that led to the global
financial crisis, and survey respondents are emphatic about the need
for stronger ethical culture at financial firms. Our members are
convinced that to build a more trustworthy industry, change must start
with top management to develop a culture where ethical practice is just
as important as investment performance."
Significant highlights of the survey - both global and Canada-specific
results - include:
Global economy expected to improve. While 40 percent expect the global economy to expand, only 20 percent
believe it will contract, down from 29 percent a year ago. Those in
advanced economies (42 percent) are more optimistic than members in
developing economies (35 percent).
Optimism for local economies, except in Europe. Almost half (45 percent) of investment professionals think the economies
of their own countries will expand in 2013, up slightly from 42 percent
last year. By stark contrast, only 28 percent of those in Europe expect
their economies to expand in the new year. Also, those in developing
economies (56 percent) are markedly more optimistic than members in
advanced economies (43 percent).
Equities expected to outperform all asset classes. Half of respondents globally think equities will provide the highest
expected total return in 2013, up from 41 percent a year ago - when
compared to bonds, cash, commodities and precious metals. Only four
percent expect cash to outperform, down sharply from 2012.
Stocks and bonds more popular as investment vehicles in Canada than
globally. When asked which investment vehicle they will use the most in 2013, 47
percent of Canadian investment professionals stated individual stocks
and bonds, compared with the global average of 38 percent. By contrast,
11 percent of Canadian respondents intend to use mutual funds, compared
with the global average of 16 percent.
Ethical cultures and behaviour within financial firms must change. More than half of respondents (56 percent) cite a lack of ethical
culture within financial firms as the primary contributor to the low
level of industry trust. Respondents think the most effective remedy is
improved ethical culture from top management, selected by 40 percent of
members as the action that is most needed. Another 26 percent of
members identified the most needed action as increased adherence to
ethical codes and standards.
Better enforcement favoured over new laws. The most important industry/regulatory action for improving market
trust and confidence in 2013 is not new regulations, but improved
enforcement of existing laws (24 percent).
Mis-selling of financial products top ethical concern locally. Mis-selling—or the pushing of unsuitable products to obtain a
commission, or failure to provide advice tailored to the client's
needs—will be the most serious ethical issue in the coming year,
according to 29 percent of members (up significantly from 13 percent
Top risks to economic growth. Survey respondents consider the two biggest risks to global market
growth to be the European sovereign debt crisis (37 percent) and weak
economic conditions (31 percent).
United States considered the best investment opportunity. When asked to rank the three equity markets that will provide the best
investment opportunities in 2013, the United States (32 percent), China
(17 percent), and Brazil (10 percent) emerged as the top three markets.
Outlook is bleak for the European sovereign debt crisis. Most respondents (77 percent) believe that the European sovereign debt
crisis will get worse or stay the same. Furthermore, 37 percent of
members worldwide are concerned about the threat of the European debt
crisis on the global economy.
Canadians more optimistic about 2013 employment opportunities. Forty-nine percent of global members expect employment opportunities for
investment professionals to stay about the same in the coming year,
similar to last year's finding. This compares to 61 percent of Canadian
members who think employment opportunities will stay about the same. In
Canada 16 percent believe opportunities will increase, similar to the
global sentiment (17%), whereas a more optimistic 24 percent think
opportunities will decrease, a difference of 9 percent compared to the
global response of 33 percent.
The annual CFA Institute Global Market Sentiment Survey seeks input from
CFA Institute members to gather data on key market and economic issues
in the coming year. The survey was conducted online from October 30 to
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 111,875 members in 137 countries and
territories, including 104,043 CFA charterholders, and 138 member
societies. For more information, visit www.cfainstitute.org.
Image with caption: "Percent of members expecting the global economy to expand (CNW Group/CFA Institute)". Image available at: http://photos.newswire.ca/images/download/20121210_C7490_PHOTO_EN_21708.jpg
Image with caption: "The factors members think have contributed the most to the current lack of trust in the finance industry (CNW Group/CFA Institute)". Image available at: http://photos.newswire.ca/images/download/20121210_C7490_PHOTO_EN_21729.jpg
SOURCE: CFA Institute
For further information:
CFA Institute, New York
+1 (212) 418-6889
Fleishman-Hillard Canada Inc.
+1 (416) 645-3648