Survey on the Economic Outlook and Impacts of COVID-19 after 10 Months | CFA Montréal members anticipate strong demand for green policies and ESG factors in investment decisions

 

An in-house survey conducted among Chartered Financial Analyst (CFA) members of CFA Montréal to obtain their perspectives on the impact of the COVID-19 pandemic reveals, among other things, that 92% of respondents expect a greater demand for green policies and that ESG factors will play an increased role in investment decisions. Climate change will be at the heart of decision-making, as 64% of respondents expect greater focus on environmental factors.

ESG factors and sustainable finance are taking on a significant new role in the investment strategies of CFA Montréal members. In this period of crisis, members see this new trend as evidence of significant awareness of environmental issues among investors.

“Nearly 70% of our members envision less dependence on China for global trade and more relocation, due to supply chain issues and de-globalization, among other reasons. It will be interesting to observe the evolution of the buy-local trend in relation to the anticipated strong demand for green policies in investment decisions for the economy. After ten months of the pandemic, the financial sector has remained very active and almost half of our members expect a return to pre-pandemic employment levels within the next 12-24 months. That would be a faster recovery than in the economic crisis of 2008 to 2010. In the meantime, our members will focus on two things: investment diversification and resilience,” said Carl Robert, CFA, President of CFA Montréal.

According to CFA Montréal members, public equity markets (46%) and private equity (38%) are the two asset classes that will offer the best returns in 2021. Ten months after the start of the pandemic, information technology (40%) and health care (29%) remain the most attractive equity sectors, while the fixed income (51%) and real estate (49%) markets will be most affected by the pandemic in the coming year.

With interest rates at historically low levels, 72% of respondents believe that institutional investors will reduce the fixed income weighting of their portfolios. On the other hand, 60% of members expect an increase in the weighting of infrastructure asset classes, 51% in private debt, 50% in private equity, 41% in equities and 31% in real estate.

Click here to access the survey results. 

Survey Highlights [1] 

• 90% believe that the massive intervention by central banks in financial markets following the financial crisis and in the COVID-19 crisis has artificially inflated asset prices.
• 94% of respondents believe that central banks’ highly leveraged balance sheets will remain so in the medium term.
• 46% expect it will take between 12 and 24 months, and 28% between 24 and 36 months, to return to pre-pandemic employment levels.
• 60% of respondents felt that investors’ portfolios were properly constructed to weather the crisis.
• 65% believe that Canadians’ personal income tax rates will increase, with 54% expecting this to occur in between 12 and 24 months.
• 73% expect U.S. corporate income tax rates to increase, compared to 49% expecting increases in Canadian corporate income tax rates.

The survey was conducted online by CFA Montréal among 2,834 members from November 19 to December 8, 2020, and 349 of them responded. The margin of error for the survey is 5%, 19 times out of 20.

 

[1] Because participants could check off more than one answer to some questions, and because of rounding, percentages do not necessarily add up to 100 in all cases.