Will 2015 be better than 2014? Here are some credible answers!

It has just been 20 days of this new year and the news is not all that great. All over the world, responses are mixed. Uncertain times like these generate low revenues but lots of questions. 

Equipped with the Global Market Sentiment Survey 2015 conducted and published by the CFA Institute, we try and answer some of those big questions;

Q1. What are the 2015 Global and Local Expected GDP Growth Rates?

Graph Source: Global Market Sentiment Survey 2015: CFA Institute

Answer: Indians surveyed for the report feel that in 2015, the global GDP would grow at 2.2% and India's GDP would rise by 5.8% over what it was in 2014. Hong Kong, Singapore and Australia feel that global GDP growth in 2015 would be 1.6% to 1.8%, clearly signalling a drop in positive outlook. America itself is looking at the global GDP rate to rise at 1.9% only.

Home and closer, both the Indian and Chinese think tanks who responded to this survey have projected healthy local GDP growth rates. China at 6.2% expected growth still tops the charts. 

Q2. Two factors that will have the biggest positive impact on the Indian economy in 2015?

Graph Source: Global Market Sentiment Survey 2015: CFA Institute

Answer: If you notice that response graph above, globally, these are the top 3 reasons that can positively impact most local economies.

#1. Political Stability in Home Market (Also the #1 reason to have a positive impact on the Indian Market)

#2. Progress of Recovery in China (This is quite mind boggling as every country in this survey feels that the Chinese recovery progress is the key to their own growth.) Of course India is the only nation that is not concerned about China! 

Indians think that a European recovery is the key external driver for growth in India in 2015. [Critical Deduction: Indians need to pray for a faster European recovery. The European nations in turn are all looking at China. Its complicated.] 

If you're an Indian and are looking for some good news in 2015, it would make sense to pray for a quicker Chinese recovery. It is pretty clear that if China sinks, the world will not be the same again, India included.

#3. Progress of Recovery in Europe (We can't stress on this factor enough but it is the second key for 2015 to look good.)

Q3. What is the biggest risk to the Indian and Global Markets in 2015?

Graph Source: Global Market Sentiment Survey 2015: CFA Institute

Answer: Weak Developed Market Economies (and thus lower demands for exports from India and lower capital inflows from developed nations into India) is the biggest risk the Indian Economy faces in 2015. When informed folks and industry leaders from India, who were involved in this survey feel that way, an export led or an interest-cut-rate led strategy may not bring the toasted industrialists and real estate folks in India much respite in 2015. 

To reduce the risk to India in 2015, developed nations must recover and we must focus on 'Make for India'. Making in India is a great long term solution for sustained growth but respite will only come when the Indian internal consumption story becomes a happy one. Pronto.

Globally, all economies are dependent on the developed economies and local performance depends on how these developed economies perform; like never before. 

However, South Africa and Australia feel otherwise though. They rate rising interest rates as the biggest risk to the economies.

Q4. Are investments in India going to increase in 2015?

With local economies across the world becoming increasingly dependent on the (Chinese?) developed nations' economies, India too relies on foreign investments heavily to chart a new growth story helped by her political stability and legendary local demand. Take a look at the graph below;

Graph Source: Global Market Sentiment Survey 2015: CFA Institute

Answer: Yes. And that is good news for India amid all the uncertainties. When asked 'If employment opportunities for Investment professionals are going to increase or not', 77% informed Indians feel that such employment is certainly going to rise in 2015. How it unfolds and in which sectors these investments get deployed in would be interesting to follow.

Thankfully, 60% Chinese folks also believe that 2015 could look good in terms of investments in China. 

Quick Inferences and Way Ahead for 2015

- 28% OF [CFA] MEMBERS HAVE A POSITIVE OUTLOOK ON MARKET INTEGRITY, UP FROM 21% IN 2014. 

- Members rank the most serious issues facing global markets as market fraud, such as insider trading (25% - similar to last year), and the integrity of financial reporting (24%).

- Locally, across nations, mis-selling by financial advisers is expected to remain an important ethical issue in 2015. Concerns about mis-selling in respondents’ home markets have gradually decreased from 29% in 2013 and 25% in 2014 to 21% in 2015. That is definitely a good trend although it remains a top concern still and needs to be lowered significantly. 

Speaking the truth is paramount, as we said in the IREFD 2015 Forecast. 

Indian firms- Look at the global trend, which is clearly swinging towards a 3 point action plan in 2015;

#1. Look after your investors. They are important. Cheesing them off will result in a disaster.

#2. Top management of all firms should have a zero tolerance policy towards unethical practices.

#3. Need for an increased compliance to ethical codes and global industry standards.

About the Global Market Sentiment Survey 2015

# What we think- Neat, crisp, credible

# Survey conducted and Published by: CFA Institute

# Download? Yes. Download the Global Market Sentiment Survey 2015

Cheers,

The IREFD Team