By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
IndebtaIndebta
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
IndebtaIndebta
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
Indebta > News > Stock market scramble has left investors skittish despite rally
News

Stock market scramble has left investors skittish despite rally

News Room
Last updated: 2023/06/17 at 2:31 AM
By News Room
Share
7 Min Read
SHARE

Pat yourself on the back. You have nearly made it to halfway through 2023. This has not been the easy ride in markets that investors had been hoping for after a grim 2022, to put it mildly. And as people take stock on their views and their portfolios, the message coming through is one of bafflement and extreme caution.

Stocks are up, sure. By nearly 16 per cent in the US, no less. But the dominance of a tiny clique of stocks and of the hype wave on artificial intelligence is giving many investors pause. 

Meanwhile, the lack of a nice, steady macroeconomic narrative is unnerving fund managers, who love to hang a portfolio strategy on a reliable view. Sadly for them, that is proving elusive. So we have ended up with pessimists who cannot understand why the recession has failed to arrive and optimists who feel like they are running their luck.

One senior bond trader at a bank in London told me recently that after repeatedly stepping on rakes so far this year, many fund managers are losing confidence. First, the consensus was for a peak in inflation that would prompt the US Federal Reserve to start preparing to cut interest rates. Then along came January’s blowout jobs data to hurl that view out of the window.

Just as investors had shifted to anticipate much higher Fed rates instead, a US regional banking crisis caught some of the smartest minds in macro off guard and sent rate expectations, and bond yields, cratering.

“Everyone was scrambling to change position,” the trader said. “There were some scary moments when Treasuries were not functioning.”

Now, many fund managers in this core market appear to have given up. Recent market conditions have been “terrible for us”, he said. Clients are reluctant to place bets, they are unconvinced on direction and they are trading less than usual. 

This reticence is evident across various asset classes. Notably, it was one of the nails in the coffin of what had been touted as London’s blockbuster stock market listing of the year. 

WE Soda, the Turkish producer of soda ash (used to make batteries and detergents, among other things) had been planning to launch shares on to the public markets as soon as this month. This is what the London market does best — it serves as a neutral home in a major financial hub for emerging-markets companies in the resources business. 

Bankers working on the deal had high hopes that generous dividends and a compelling business story would get this deal over the line. More than that, in fact: it would have been a $7.5bn deal, big enough to get WE Soda included in the FTSE 100 index. But this week, the transaction fell apart, invoking a terse reaction from the company, which had set up its own listing as a major test for London’s efforts to revitalise its stock market. “This question is this issue of caution in terms of the IPO market and what discount they demand for that caution,” said chief executive Alasdair Warren.

In this case, the discount was about 30 per cent below what the company was looking for. That is a huge, unbridgeable gap, and clearly the bankers behind the deal will need to take some responsibility for it. But one of them said would-be investors were not just “cautious”. Instead, they are “quite scared”.

“There’s career risk if you buy something and it goes down 12, 15 per cent,” this person said. This year has so far brought a grand total of five new stock market listings in London — a drab tally. And high-profile listings over the past few years have left investors reeling. THG listed in September 2020. Since then it is down 90 per cent. Deliveroo has fallen 64 per cent since it listed in March 2021. Dr Martens is down 70 per cent. You get the idea.

No one, it seems, wants to be the fund manager hauled up in front of an investment committee to explain why they took a punt on this latest offering. Never underestimate how far investors will go to avoid looking daft in front of their boss.

For Fabiana Fedeli, chief investment officer for equities, multi asset and sustainability at M&G Investments, taking calculated risk has to be the answer to navigating through this tricky economic environment, but precisely in that space — in individual stocks — rather than with big, bold views. “We stand by our position that this is not a market for ‘broad strokes investing’ — taking directional macroeconomic calls and swinging entire portfolios one way or the other,” she said in a note this week.

Predicting the timing of any economic recession remains a fool’s errand. Instead, Fedeli said, stock selection is the way to eke out returns beyond those on offer from wide indices.

“Higher-than-average return dispersion both between and within sectors reinforces our belief that selection is the way to deliver [additional returns] in the current environment,” she said. “In our view, the market offers attractive opportunities for bottom up, fundamental investors who are willing to dig a little deeper . . . Volatility has to necessarily become our friend.” That is easier said than done.

katie.martin@ft.com

Read the full article here

News Room June 17, 2023 June 17, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Ukraine and Russia exchange massive air strikes ahead of peace talks

Stay informed with free updatesSimply sign up to the War in Ukraine…

‘Mischief before money’: inside the M&S hackers’ hunt for new targets

The hacking group that pierced the online defences of UK retailer Marks…

Influential economist Stanley Fischer dies

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Early adoption of AI will boost US growth

Business deployment of artificial intelligence has reached a tipping point. UBS is…

US Steel workers see hope of job security in deal with Japan’s Nippon

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

- Advertisement -
Ad imageAd image

You Might Also Like

News

Ukraine and Russia exchange massive air strikes ahead of peace talks

By News Room
News

‘Mischief before money’: inside the M&S hackers’ hunt for new targets

By News Room
News

Influential economist Stanley Fischer dies

By News Room
News

Early adoption of AI will boost US growth

By News Room
News

US Steel workers see hope of job security in deal with Japan’s Nippon

By News Room
News

‘No timewasters please’: is setting boundaries necessary or plain rude?

By News Room
News

Poland votes in tight presidential election

By News Room
News

Kelly Ortberg: Boeing should not be an ‘unintended consequence’ of trade war

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?