cfa institute - global market sentiment survey: detailed results - january 2014

GLOBAL MARKET SENTIMENT SURVEY 2014 DETAILED SURVEY RESULTS December 2013

CFA Institute

TABLE OF CONTENTS EXECUTIVE SUMMARY FULL RESULTS 1. INVESTMENT PROFESSIONALS INCREASINGLY CONFIDENT GLOBAL AND

LOCAL ECONOMIES WILL GROW IN 2014 2. POLITICAL INSTABILITY AND THE END OF QUANTITATIVE EASING BRING

UNCERTAINTY TO LOCAL MARKETS 3. MEMBERS CALL FOR GLOBAL OVERSIGHT AND LOCAL ENFORCEMENT 4. LACK OF ETHICAL CULTURE IN FINANCIAL FIRMS ERODING INVESTOR TRUST

ABOUT THIS STUDY

CFA Institute 3 Global Market Sentiment Survey 2014

EXECUTIVE SUMMARY CFA Institute members report greater optimism over economic prospects for the coming year, with an especially dramatic turn in sentiment from European members compared to last year. But these same investment professionals do not express confidence that the integrity of capital markets is improving. As markets rebound, CFA Institute is working to ensure that attention does not shift away from meaningful reforms that might restore investor trust and strengthen the financial system’s ability to resist shocks in the future.

CFA Institute

Economic turnaround in Europe is reflected in greater optimism about the worldwide economy, tempered by concerns over political instability.

INVESTMENT PROFESSIONALS INCREASINGLY CONFIDENT GLOBAL AND LOCAL ECONOMIES WILL GROW IN 2014


63%

27%

9%

62%

27%

9%

56%

31%

12%

69%

23%

6%

Expand Stay roughly the same Contract

Global AMER APAC EMEA

“Not Sure” option not displayed

IN 2014, DO YOU EXPECT THE GLOBAL ECONOMY TO:




63%

78%

74%

70%

65%

64%

62%

62%

61%

59%

59%

56%

54%

48%

27%

16%

24%

23%

25%

21%

27%

28%

34%

31%

28%

31%

29%

34%

9%

6%

5%

9%

12%

10%

9%

4%

8%

12%

12%

15%

12%

Global

United Kingdom

Brazil

Germany

South Africa

Switzerland

Canada

USA

Japan

Australia

Singapore

India

Hong Kong

China





34% 36%

25%

38% 34% 35%

30% 34%

29% 27%

42%

27%

40% 39%

32%

50%

38% 38% 41%

35%

20% 22% 24%

14%

63% 62%

56%

69%

27% 27% 31%

23%

9% 9% 12%

6%

Global AMER APAC EMEA Global AMER APAC EMEA Global AMER APAC EMEA


2012 2013 2014


57%

33%

9%

59%

32%

8%

52%

34%

13%

56%

34%

9%


Local aggregate AMER APAC EMEA


IN 2014, DO YOU EXPECT YOUR LOCAL ECONOMY TO:




57%

74%

73%

65%

62%

61%

56%

52%

51%

47%

47%

46%

45%

37%

33%

22%

21%

33%

29%

28%

38%

32%

43%

43%

41%

40%

34%

44%

9%

3%

5%

1%

8%

9%

5%

15%

6%

9%

11%

14%

18%

18%

Local aggregate

United Kingdom

Japan

Germany

USA

India

Switzerland

Australia

Brazil

Canada

Singapore

South Africa

China

Hong Kong





42% 46%

47%

24%

40% 41%

31%

44%

17% 12%

21%

30%

45% 49%

46%

33%

38% 37% 36%

42%

16% 13%

16%

24%

57% 59%

52% 56%

33% 32% 34% 34%

9% 8%

13% 9%

Localaggregate

AMER APAC EMEA Localaggregate

AMER APAC EMEA Localaggregate

AMER APAC EMEA


2012 2013 2014


32%

26%

21%

8%

5%

2% 2%

5%

29% 28%

20%

10%

5%

2% 1%

5%

34%

26%

22%

4% 5%

3% 2%

3%

38%

22% 22%

5% 5%

2% 1%

5%

Increased focuson

resolving/easingglobal sovereigndebt challenges

Growth ratesamong emerging

economies

Increased focuson solutions to

create more jobs

Reducing taxrates on incomeand capital gain

Increasedmarket

transparency

Improvedregulation

Improvedenforcement of

existingregulation

Other


*“No opinion” option excluded from results.

WHAT DO YOU SEE AS HAVING THE BIGGEST POSITIVE IMPACT ON GLOBAL CAPITAL MARKETS IN 2014?*


32%

49%

45%

44%

43%

37%

35%

35%

34%

34%

34%

30%

27%

14%

26%

22%

22%

22%

30%

24%

23%

25%

29%

21%

26%

28%

28%

44%

21%

8%

12%

24%

19%

24%

26%

18%

22%

15%

21%

22%

21%

24%

Global

Brazil

Germany

India

Switzerland

Australia

Hong Kong

United Kingdom

Canada

China

South Africa

Singapore

USA

Japan

Increased focus on resolving/easing global sovereign debt challenges

Growth rates among emerging economies

Increased focus on solutions to create more jobs

*Displaying top three positive impacts on global capital markets.

“No opinion” option excluded from results.

WHAT DO YOU SEE AS HAVING THE BIGGEST POSITIVE IMPACT ON GLOBAL CAPITAL MARKETS IN 2014?*

CFA Institute

EQUITIES EXPECTED TO PROVIDE THE HIGHEST RETURN AMONG ASSEST CLASSES IN 2014


RANK THE FOLLOWING ASSET CLASSES IN ORDER OF EXPECTED TOTAL RETURN IN THE GLOBAL MARKETS IN 2014*

71%

10% 9% 6%

4%

71%

11% 9%

5% 4%

68%

10% 8% 7% 7%

71%

11% 9%

6% 4%

Equities Commodities Precious metals Cash Bonds


*Chart displaying proportion of members ranking the asset class as likely to have the highest expected return.



71%

80%

77%

76%

75%

74%

73%

73%

71%

69%

69%

61%

55%

54%

10%

5%

9%

8%

11%

10%

10%

10%

5%

11%

13%

10%

11%

13%

9%

7%

7%

6%

9%

10%

9%

10%

9%

11%

9%

9%

13%

11%

6%

1%

2%

6%

3%

5%

5%

5%

8%

5%

7%

9%

12%

8%

4%

6%

6%

4%

3%

1%

3%

2%

7%

3%

3%

11%

10%

14%

Global

Japan

United Kingdom

Singapore

Australia

Switzerland

USA

South Africa

Hong Kong

Canada

Germany

China

Brazil

India






41%

15%

25%

9% 10%

50%

16%

22%

4% 8%

71%

10% 9% 6%

4%


2012 2013 2014

CFA Institute

UNITED STATES AND CHINA CONTINUE TO PROVIDE THE BEST INVESTMENT OPPORTUNITIES


WHICH EQUITY MARKET DO YOU THINK WILL PROVIDE THE BEST INVESTMENT OPPORTUNITY IN 2014?*

26%

10%

6% 6% 5%

3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2%

1% 1% 1% 1% 1% 1% 1% 1% 1% 1%

Global

*Chart shows proportion of members picking the market as the best investment opportunity


WHICH EQUITY MARKET DO YOU THINK WILL PROVIDE THE BEST INVESTMENT OPPORTUNITY IN 2014?*

26%

10%

6% 6% 5%

31%

9%

5% 6% 6%

25%

20%

10%

5%

1%

16%

8%

6% 7%

6%

USA China Japan Germany Brazil


*Chart shows proportion of members picking the market as the best investment opportunity (top 5 displayed)

CFA Institute

INVESTMENT SERVICES JOB MARKET OUTLOOK


28%

50%

22%

26%

53%

20%

33%

44%

23%

27%

46%

27%

Increase Stay about the same Decrease


IN 2014, DO YOU EXPECT EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS IN YOUR LOCAL MARKET TO INCREASE, DECREASE, OR STAY ABOUT THE SAME?

“Not Sure” option excluded


28%

55%

48%

45%

30%

30%

29%

27%

21%

19%

17%

17%

16%

16%

50%

30%

35%

43%

49%

38%

52%

50%

54%

50%

60%

53%

69%

38%

22%

15%

17%

12%

21%

32%

19%

24%

25%

30%

22%

31%

14%

46%

Local aggregate

Japan

China

United Kingdom

India

Australia

USA

Singapore

Hong Kong

Germany

Canada

Brazil

South Africa

Switzerland







14%

51%

35%

17%

49%

33%

28%

50%

22%


2012 2013 2014

CFA Institute

Investment professionals in some major markets point towards political instability and unrest in the Middle East to impact local performance.

POLITICAL INSTABILITY AND THE END OF QUANTITATIVE EASING BRING UNCERTAINTY TO LOCAL MARKETS


31%

25%

20%

13%

6%

2%

4%

32%

27%

18%

13%

5%

2%

4%

33%

21%

23%

13%

4%

2%

5%

28%

23% 24%

12%

7%

2%

4%

Weak economicconditions

Political instability Systemicdisruptions


economies

Excess regulation Weak regulation Other


"No opinion” option excluded from results.

WHAT DO YOU SEE AS THE BIGGEST RISK TO GLOBAL CAPITAL MARKETS IN 2014?


31%

44%

43%

39%

36%

32%

32%

30%

29%

24%

23%

22%

15%

12%

25%

19%

6%

14%

13%

27%

22%

32%

23%

28%

28%

30%

25%

43%

20%

13%

26%

19%

19%

17%

21%

18%

29%

27%

24%

21%

34%

12%

Global

China

India

South Africa

Brazil

USA

Hong Kong

Canada

Singapore

Australia

United Kingdom

Switzerland

Germany

Japan

Weak economic conditions Political instability Systemic disruptions

*Displaying top three risks to global markets.


WHAT DO YOU SEE AS THE BIGGEST RISK TO GLOBAL CAPITAL MARKETS IN 2014?*


31%

28%

15%

10%

8%

3%

6%

31% 31%

16%

9%

5%

1%

7%

28%

24%

7%

12%

18%

6% 5%

33%

24%

17%

10%

6%

4% 5%

Weak economicconditions

Political instability Excess regulation Systemicdisruptions


economies

Weak regulation Other



WHAT DO YOU SEE AS THE BIGGEST RISK TO YOUR LOCAL MARKET IN 2014?


31%

49%

43%

41%

33%

30%

29%

28%

26%

24%

22%

21%

19%

15%

28%

2%

5%

13%

16%

9%

38%

37%

2%

21%

12%

5%

53%

78%

15%

7%

9%

16%

13%

8%

18%

18%

5%

6%

31%

43%

6%

3%

Local aggregate

Australia

Canada

United Kingdom

Japan

China

Brazil

USA

Singapore

Hong Kong

Germany

Switzerland

South Africa

India

Weak economic conditions Political instability Excess regulation

*Displaying top three risks to local markets.


WHAT DO YOU SEE AS THE BIGGEST RISK TO YOUR LOCAL MARKET IN 2014?*


WHAT IMPACT, IF ANY, WILL THE FOLLOWING HAVE ON YOUR LOCAL MARKET IN 2014:

68%

14% 12% 5%

60%

23%

13%

4%

22%

59%

3%

15% 22%

39%

26%

13%

35%

26%

37%

2%

12% 13%

71%

4% 8%

11%

79%

2%

Neg

ativ

e im

pact

No

impa

ct

Pos

itive

impa

ct

Don

’t kn

ow

Neg

ativ

e im

pact

No

impa

ct

Pos

itive

impa

ct

Don

’t kn

ow

Neg

ativ

e im

pact

No

impa

ct

Pos

itive

impa

ct

Don

’t kn

ow

Neg

ativ

e im

pact

No

impa

ct

Pos

itive

impa

ct

Don

’t kn

ow

Neg

ativ

e im

pact

No

impa

ct

Pos

itive

impa

ct

Don

’t kn

ow

Neg

ativ

e im

pact

No

impa

ct

Pos

itive

impa

ct

Don

’t kn

ow

Neg

ativ

e im

pact

No

impa

ct

Pos

itive

impa

ct

Don

’t kn

ow

Central banksattempts to end

quantitative easing

Effects on energyprices caused byunrest in Middle

East

Fallout from riggingof benchmark rates

Growth of non-banklending or shadow

banking sector

Political stability inyour home market

Progress of recoveryin China

Progress of recoveryin Europe

Scale: Negative impact, No impact, Positive impact and Don’t know


68%

13%

52%

17% 22%

3%

18%

26%

43%

30%

13%

69%

9%

75% 72%

13%

75%

6%

25%

7%

39%

22% 23%

51%

13%

78%

7%

80%

65%

11%

68%

10%

22%

3%

20%

28% 23%

46%

10%

72%

8%

87%

Negativeimpact

Positiveimpact

Negativeimpact

Positiveimpact

Negativeimpact

Positiveimpact

Negativeimpact

Positiveimpact

Negativeimpact

Positiveimpact

Negativeimpact

Positiveimpact

Negativeimpact

Positiveimpact

Central banksattempts to end

quantitative easing

Effects on energyprices caused byunrest in Middle

East

Fallout from riggingof benchmark rates

Growth of non-banklending or shadow

banking sector

Political stability inyour home market

Progress of recoveryin China

Progress of recoveryin Europe

AMER APAC EMEA

WHAT IMPACT, IF ANY, WILL THE FOLLOWING HAVE ON YOUR LOCAL MARKET IN 2014:

“No impact” and “Don’t know” option not displayed

Scale: Negative impact, No impact, Positive impact and Don’t know


IN THE COMING 12 MONTHS, DO YOU ANTICIPATE A FINANCIAL BUBBLE IN YOUR LOCAL MARKET AND IF SO, WITHIN WHICH ASSET CLASS?

26%

13% 10%

1% 1% 1% 1%

47%

16% 15% 13%

1% 1% 1% 2%

51% 52%

7% 4%

2% 1% 1% 1%

32% 30%

10% 7%

1% 1% 1% 1%

50%

Real estate Equities Bonds Precious metals Commodities Cash Other Do not anticipatea financial bubble



26%

77%

68%

59%

51%

50%

48%

47%

43%

34%

32%

23%

9%

5%

13%

5%

5%

6%

9%

5%

8%

5%

5%

16%

12%

19%

27%

10%

3%

4%

5%

5%

3%

2%

8%

5%

13%

1%

14%

16%

7%

1%

0%

1%

7%

1%

2%

2%

1%

Local aggregate

China

Hong Kong

Singapore

United Kingdom

Australia

India

Switzerland

Canada

Germany

Brazil

Japan

USA

South Africa

Real estate Equities Bonds Precious metals

*Displaying top four response options (excluding proportion selecting no financial bubble)

IN THE COMING 12 MONTHS, DO YOU ANTICIPATE A FINANCIAL BUBBLE IN YOUR LOCAL MARKET AND IF SO, WITHIN WHICH ASSET CLASS?

CFA Institute

Globally, members cite improved regulation and oversight of global systemic risks as the most important action needed in 2014 to build investor trust and market integrity. At the local level members say better enforcement of existing laws and stronger corporate governance standards are the steps needed to improve market integrity.

MEMBERS CALL FOR GLOBAL OVERSIGHT AND LOCAL ENFORCEMENT


22%

56%

21% 21%

57%

22% 23%

56%

21%

26%

56%

18%

Poor (1 + 2) 3 Excellent (4+5)


Chart displays Poor(1+2), 3 and Excellent (4+5)

HOW WOULD YOU RATE THE LEVEL OF INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2013? Scale: Poor (1) to Excellent (5)


22%

32%

28%

26%

25%

25%

24%

23%

22%

20%

19%

18%

16%

13%

56%

56%

55%

53%

54%

53%

52%

55%

55%

60%

59%

56%

60%

61%

21%

12%

17%

21%

21%

22%

24%

22%

23%

19%

23%

27%

23%

26%

Global

Switzerland

India

Germany

Australia

Singapore

Japan

United Kingdom

USA

Canada

South Africa

Hong Kong

Brazil

China




Chart displays Poor(1+2), 3 and Excellent (4+5)


26%

54%

20% 22%

56%

21%


2012 2013


26%

68%

6%

23%

71%

6%

32%

61%

7%

27%

67%

6%

Better About the same Worse


DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2014 WILL BE BETTER OR WORSE THAN IN 2013?


26%

39%

36%

34%

32%

32%

29%

28%

27%

24%

23%

23%

22%

22%

68%

56%

57%

57%

64%

62%

70%

67%

66%

69%

71%

69%

71%

70%

6%

5%

7%

8%

4%

6%

1%

5%

6%

6%

6%

8%

6%

8%

Global

China

Australia

India

Brazil

United Kingdom

Japan

South Africa

Singapore

Germany

Canada

Switzerland

USA

Hong Kong


DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN 2014 WILL BE BETTER OR WORSE THAN IN 2013?


*Upcoming year displayed the future year (e.g. 2014) **Current year displayed the present year (e.g. 2013)

22%

56%

22% 26%

67%

7%

26%

68%

6%


2012 2013 2014

DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN (UPCOMING YEAR*) WILL BE BETTER OR WORSE THAN IN (CURRENT YEAR**)?


29%

21%

17% 16%

11%

6%

10%

17%

24%

30%

15%

5%

Improved regulationand oversight of global

systemic risk

Improved transparencyof financial reportingand other corporate

disclosures

Improved corporategovernance practices

Improved enforcementof existing laws and

regulations

Improved markettrading rules on

transparency andfrequency of trades

Improved auditingpractices and

standards

GLOBALLY IN LOCAL MARKET

WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED IN THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY?


29%

48%

46%

40%

39%

38%

37%

36%

32%

32%

30%

29%

29%

22%

21%

11%

15%

9%

13%

13%

15%

12%

18%

13%

15%

16%

12%

28%

17%

15%

11%

17%

18%

19%

16%

19%

21%

22%

19%

18%

23%

16%

16%

13%

9%

15%

14%

16%

17%

20%

16%

20%

10%

18%

18%

16%

11%

6%

13%

13%

13%

11%

8%

10%

11%

10%

18%

15%

15%

11%

6%

6%

7%

6%

4%

4%

8%

3%

1%

4%

8%

5%

4%

7%

Global

India

China

Hong Kong

Singapore

South Africa

Brazil

Germany

Australia

United Kingdom

Japan

Canada

Switzerland

USA

Improved regulation and oversight of globalsystemic riskImproved transparency of financial reportingand other corporate disclosuresImproved corporate governance practices

Improved enforcement of existing laws andregulationsImproved market trading rules on transparencyand frequency of tradesImproved auditing practices and standards

WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED GLOBALLY IN THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY?


30%

41%

34%

33%

32%

32%

31%

30%

30%

30%

23%

21%

16%

11%

24%

24%

14%

22%

31%

24%

24%

27%

27%

19%

31%

31%

23%

48%

17%

17%

27%

16%

20%

16%

12%

14%

13%

16%

17%

20%

19%

13%

15%

7%

12%

15%

4%

9%

10%

13%

10%

21%

10%

9%

20%

13%

10%

3%

5%

9%

5%

10%

17%

12%

15%

10%

16%

10%

15%

5%

5%

8%

8%

4%

8%

8%

6%

4%

4%

4%

3%

9%

7%

11%

Local aggregate

Brazil

China

Canada

India

South Africa

United Kingdom

Australia

Germany

USA

Switzerland

Hong Kong

Singapore

Japan

Improved enforcement of existing laws andregulationsImproved corporate governance practices

Improved transparency of financial reportingand other corporate disclosuresImproved market trading rules on transparencyand frequency of tradesImproved regulation and oversight of globalsystemic riskImproved auditing practices and standards

WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED IN YOUR LOCAL MARKET FOR THE COMING YEAR (2014) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY?


IN YOUR OPINION, IS EACH OF THE FOLLOWING REGULATORY REFORMS MORE LIKELY TO:

73%

16%

68%

12%

68%

12%

66%

27%

53%

33%

51%

27%

49%

34%

46%

20%

40%

24%

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Pre

vent

futu

re c

rises

Neg

ativ

e co

nseq

uenc

es

Require Banksto impair

troubled creditholdings on a

more consistentand timely basis

Increasedglobal

coordination ofmonitoring ofsystemic risks

Morestandardizedcontracts with

increasedcentral clearing

Increased bankcapital and

liquidityrequirements

Proposals likethe VolckerRule to limit

bank proprietarytrading

Proposals forring-fencing

retail bankingactivities

Designation of “too big to fail” institutions for

closer monitoring

Increasedregulatory

monitoring ofhedge funds

Reduce relianceon and

reference tocredit-ratings

agency ratings

Global

“Have no Impact” option not displayed “No opinion” option excluded

Scale: Have no impact, Prevent future financial crises, Result in unintended negative consequences and No opinion


25% 24%

16%

13% 12%

10%

23% 23% 21%

11%

14%

9%

24%

32%

7%

20%

9% 8%

30%

21%

9%

15%

10%

15%

Mis-selling by financialadvisers

Market fraud Market tradingpractices

Integrity of financialreporting

Disclosure/use offinancial derivatives

Investmentmanagement

services/structure


*Chart displaying proportion of members ranking the ethical issue as the most serious facing their local market.

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS*


25%

53%

48%

40%

34%

34%

31%

30%

27%

25%

22%

20%

14%

8%

24%

11%

12%

12%

17%

13%

21%

34%

28%

30%

27%

23%

52%

55%

16%

2%

12%

14%

14%

12%

12%

6%

4%

10%

7%

24%

2%

5%

Local aggregate

South Africa

Australia

Germany

Canada

Switzerland

United Kingdom

Japan

India

Singapore

Hong Kong

USA

Brazil

China

Mis-selling by financial advisers Market fraud Market trading practices

*Chart displaying the top three ethical issues facing local market (based on global rankings)

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS*


13%

22%

18% 16%

16% 15%

29%

19%

14% 15%

12% 11%

25% 24%

16%

13% 12%

10%


Market fraud Market tradingpractices

Integrity of financialreporting



services/structure

2012 2013 2014

*Chart displaying proportion of members ranking the ethical issue as the most serious facing their local market.

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS*


24%

21% 20%

16%

12%

6%

27%

24%

18%

15%

11%

5%

21%

18%

27%

15%

12%

8%

20%

16%

21%

17% 16%

9%

Market fraud Integrity of financialreporting


Market tradingpractices



services/structure


*Chart displaying proportion of members ranking the ethical issue as the most serious facing global markets.

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS*


24%

30%

29%

28%

26%

26%

26%

24%

23%

22%

20%

18%

17%

16%

21%

15%

15%

26%

22%

16%

19%

19%

13%

12%

14%

24%

17%

21%

20%

22%

20%

18%

19%

22%

16%

19%

16%

15%

28%

16%

32%

34%

Global

Singapore

Japan

USA

Brazil

Hong Kong

United Kingdom

Canada

Switzerland

Germany

South Africa

Australia

China

India

Market fraud Integrity of financial reporting Disclosure/use of financial derivatives

*Chart displaying the top three ethical issues facing global markets (based on global rankings)

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR (2014) IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS*


15%

12%

20%

16%

21%

15%

19%

21% 23%

16%

13%

8%

24%

21% 20%

16%

12%

6%

Market fraud Integrity of financialreporting


Market tradingpractices



services/structure

2012 2013 2014

*Chart displaying proportion of members ranking the ethical issue as the most serious facing global markets.

PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS*

CFA Institute

LACK OF ETHICAL CULTURE IN FINANCIAL FIRMS ERODING INVESTOR TRUST

To rebuild the confidence of investors in the financial sector, ethical conduct cannot simply be legislated or taken for granted; it must be fostered and encouraged by an ethical culture at the firm-level.


54%

13% 10%

7% 4%

2%

10%

51%

16%

10% 7%

3% 2%

11%

56%

12% 12% 9%

4% 2%

6%

61%

7% 9%

7% 5%

2%

8%

Lack of ethicalculture withinfinancial firms

Market disruptions (failed IPO’s, flash

crash etc.)

Poor governmentenforcement

Poor governmentregulation

Lack of stafftraining and

education withinfinancial firms

I don’t think there is a lack of trust in the

finance industry.

Other



WHICH FACTOR DO YOU THINK HAS CONTRIBUTED THE MOST TO THE CURRENT LACK OF TRUST IN THE FINANCE INDUSTRY?


54%

71%

63%

62%

60%

60%

60%

58%

55%

54%

52%

52%

49%

43%

13%

2%

7%

9%

13%

10%

7%

4%

12%

11%

12%

20%

17%

15%

10%

5%

13%

11%

7%

9%

11%

10%

11%

8%

7%

9%

10%

17%

Global

Switzerland

Singapore

India

Japan

South Africa

United Kingdom

Germany

Canada

Australia

Brazil

Hong Kong

USA

China

Lack of ethical culture within financial firms Market disruptions (failed IPO’s, flash crash etc.) Poor government enforcement

*Displaying top three factors contributing to the current lack of trust in the finance industry.


WHICH FACTOR DO YOU THINK HAS CONTRIBUTED THE MOST TO THE CURRENT LACK OF TRUST IN THE FINANCE INDUSTRY?*


WHICH ONE OF THE FOLLOWING FIRM LEVEL ACTIONS IS MOST NEEDED IN THE COMING YEAR TO HELP IMPROVE INVESTOR TRUST AND CONFIDENCE? 40%

26%

13% 12%

6%

2%

39%

25%

13% 14%

5% 3%

40%

25%

14% 12%

7%

1%

40%

28%

13%

9% 8%

2%

Improved cultureestablished and

encouraged by topmanagement and

executives

Increased adherenceto ethical codes and

standards

Improvedcompensation

practices

Clarification offiduciary duty

responsibilities

Increased staff trainingand education

Other




40%

49%

46%

44%

44%

43%

43%

43%

42%

39%

38%

36%

34%

30%

26%

20%

24%

22%

27%

18%

20%

23%

20%

25%

23%

37%

29%

30%

13%

16%

11%

15%

10%

18%

15%

16%

15%

14%

15%

8%

17%

13%

12%

6%

7%

12%

10%

9%

14%

10%

12%

14%

15%

10%

18%

15%

6%

7%

10%

6%

8%

11%

5%

6%

8%

5%

8%

7%

3%

10%

2%

1%

3%

2%

1%

1%

3%

3%

3%

3%

1%

1%

2%

Global

Singapore

Germany

Canada

South Africa

Japan

Switzerland

United Kingdom

Australia

USA

Hong Kong

India

China

Brazil

Improved culture established and encouragedby top management and executivesIncreased adherence to ethical codes andstandardsImproved compensation practices

Clarification of fiduciary duty responsibilities

Increased staff training and education

Other


WHICH ONE OF THE FOLLOWING FIRM LEVEL ACTIONS IS MOST NEEDED IN THE COMING YEAR TO HELP IMPROVE INVESTOR TRUST AND CONFIDENCE?

ABOUT THIS STUDY


ABOUT THIS SURVEY The CFA Institute Global Market Sentiment Survey was created to seek input from CFA Institute members and gather feedback on market sentiment, performance, and market integrity issues, and to further our mission of promoting ethical and trustworthy investment markets.

METHODOLOGY An online survey was conducted from 2 to 17 October 2013. All CFA Institute members globally (119,817) were invited to participate in the survey; 6,561 responded, for an overall response rate of 5.5% and a margin of error of ±1.8%. In addition to analysis and reporting at the global and regional level, 13 market-specific reports are also included.

Note: Total percentage of some charts in this report may not add up to 100% due to rounding


RESPONDENT PROFILE

USA 2,906

CANADA 738

UNITED KINGDOM 302

HONG KONG 185

SWITZERLAND 172

GERMANY 167

CHINA 162

INDIA 162

AUSTRALIA 159

SINGAPORE 137

SOUTH AFRICA 105

BRAZIL 95

JAPAN 87

TOP MARKETS

59% AMER

24% EMEA

17% APAC

# OF RESPONDENTS


RESPONDENT PROFILE

13%

31%

18%

14%

21%

3%

Years In Industry

≤ 5 years 6 to 10 years 11 to 15 years

16 to 20 years >20 years Not Applicable

34%

17%

4% 3% 3%

Equities Fixed Income Private Equity Derivatives Real Estate

Primary Investment Practice (Top 5)

19%

14%

6% 6% 6% 4%

PortfolioManager

ResearchAnalyst

FinancialAdvisor

Consultant CorporateFinancialAnalyst

RiskManager

Job Function (Top 6)


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 119,000 members in 140 countries and territories, including 112,000 CFA charterholders, and 137 member societies. For more information, visit www.cfainstitute.org.

QUESTIONS? Media inquiries: J.D. McCartney Director, Public Relations, The Americas [email protected] Survey inquiries: Prashant Goswami Analyst, Market Intelligence [email protected]

LEARN MORE ABOUT THIS STUDY ON OUR WEBSITE AT: www.cfainstitute.org/gmss

http://www.cfainstitute.org/

mailto:[email protected]

mailto:[email protected]?subject=Global Market Sentiment Survey 2014

http://www.cfainstitute.org/gmss

cfa institute - global market sentiment survey: detailed results - january 2014

Business

global markets

global economy

global capital markets

local markets

local economy

global oversight

sure option

local economies