Latest asset manager survey: Liquidity could drive markets higher but fears remain

•Bearish outlook on rand
•Consolidation seen in gold, oil
•Upside expected in equities

Investment Solutions, SA’s leading provider of multi-manager investment portfolios, has released its February Asset Manager survey which point to ongoing uncertainty in global financial markets, despite brighter economic prospects.

The twice yearly survey gauges the economic and financial market views of fourteen of South Africa top-ranked asset managers.

Keegan Edwards, Economist at Investment Solutions, said that 70% of managers surveyed were ‘mildly bullish’ on the FTSE JSE All Share Index expecting it to end 2010 between 30 000 and 33 000.

“Ten percent of managers were ‘neutral’ expecting the index to finish 2010 between 27 000 and 30 000, while 10% are ‘mildly bearish’ expecting it to end between 24 000 and 27 000.

“This is in sharp contrast to our finding from the same survey six months ago when only 30% of fund managers were ‘mildly bullish’ reflecting greater confidence in the market despite strong gains,” noted Edwards.

“We know there is money out there waiting to come into the markets but with valuations quite high there is an understandable hesitancy amongst fund managers.”

Looking at international markets, 60% of fund managers are ‘mildly bullish’ on the S&P index expecting it to see out the year between 1200 and 1300, while 50% are ‘mildly bullish’ on the FTSE expecting it to close the year between 6 000 and 6 500.

When it comes to the tricky- to- forecast rand, no fund managers are bullish.

“This is one area where people have a clustering of views. Ninety percent of those surveyed were ‘mildly bearish’ on the rand’s 2010 prospects expecting it to see out the year between 7.50 and 8.50 to the US dollar.

“And 10% of managers were neutral forecasting the rand in a 7 to 7.50 range against the greenback. No one is bullish.”

When quizzed on the country’s economic growth outlook, there has been a dramatic shift in perceptions from just six months ago.

Currently 15% of managers are ‘highly bullish’ on SA growth prospects expecting GDP growth of more than 3% for 2010. Seventy percent were ‘mildly bullish’ seeing growth at between 2 and 3% while the remaining 15% were ‘neutral’ with 1 to 2% growth expectations.