They worry the high leverage in the system has not been reduced
Today is exactly one year to the day that United States investment bank Lehman Brothers collapsed, and for a majority of fund managers surveyed around the world, the financial crisis that failure sparked is not over yet.
Of the 153 largest institutional investors polled by business advisory firm FTI Consulting, 64 per cent felt that the crisis had not ended. Asian investors, including some from Singapore, were slightly more optimistic, with 62 per cent believing the crisis had some way to go.
British, US and Australian investors were the most pessimistic, with 73 per cent, 76 per cent and 80 per cent of investors respectively believing the crisis had not ended.
Commenting on the survey, FTI’s president and chief executive Jack Dunn said: ‘Anecdotal evidence gathered during the survey suggests that across the globe, investors were still concerned the amount of leverage in the system that caused the original problem has not been reduced.
‘The prevailing view was that there has been so much economic stimulus that markets cannot help but go up,’ he said. ‘The concern was what would happen when government money runs out.’
The paradox, said Mr Dunn, is that despite the negative outlook, global equity markets have rallied significantly in recent months.
‘This indicates a willingness of investors, for now at least, to focus on factors beyond the fundamental issues that caused our current economic crisis.’
A separate global poll, meanwhile, found most people around the world supported massive government spending to counter the economic crisis, Reuters reported.
The BBC World Service survey of more than 22,000 people in 20 countries found that, on average, 60 per cent favoured significantly increasing government spending to stimulate the economy.
Americans were split down the middle over the issue: 48 per cent in favour and 48 per cent against.
Stimulus support was highest in Nigeria (87 per cent support), followed by Egypt and Russia. It was much lower in France (39 per cent) and Germany (42 per cent).
The Group of 20 finance leaders agreed this month that they would not remove emergency stimulus until the recovery was well entrenched.
The poll found that support was especially strong for investments in renewable energy and green technology, and for giving financial support to major industries and companies in trouble.
But only a slight majority supported giving financial support to banks in trouble. In the US, a clear majority were opposed to helping troubled banks or industries.
Two-thirds of those polled wanted to see an increase in government regulation and oversight of their economies. Just under half supported giving international institutions more power to regulate the global economy.
The US government’s efforts to address the crisis were relatively well received around the world. Nearly half the respondents said they were satisfied with what the US has been doing, compared with 39 per cent who were dissatisfied, said Reuters.
In contrast, 44 per cent on average were satisfied with their own governments’ response.
Not surprisingly, many people were angry over high rewards enjoyed by bankers, which they felt led to excessive risk-taking that contributed to the financial crisis.
REUTERS
Results of poll
OUT of 153 fund managers polled globally, those who feel:
By region, those who believe the crisis has not yet ended:
Source : Straits Times – 15 Sep 2009
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