Three quarters (75%) of European investors believe Europe will grow by 1% or more in 2014, and 39% say Europe will be the best performing equity market

The geopolitical environment is their biggest concern (33%), followed by the Fed's exit from quantitative easing (30%)

Half (54%) believe equities will be the best performing asset class of the year

Three quarters (75%) plan to commit additional cash to investing in 2014

DUBAI, United Arab Emirates - 15 April 2014 - J.P. Morgan Private Bank has revealed the expectations of Ultra High Net Worth and High Net Worth European investors on market conditions, risk appetite and investment sentiment for 2014, as part of the Bank's latest Private Client Survey.

Conducted as part of the Private Bank's latest Investment Insights series between January and February 2014, held in 15 cities across Europe amongst more than 900 UHNW and HNW investors, the survey* polled participants on their market outlook, including investment views on the key risks for the next 12 months, as well as investment sentiment and their anticipated portfolio positioning.

When asked about European economic growth, almost all investors (95%) are convinced that Europe will grow in 2014. The majority (49%) believe Europe will grow at a rate of 1% in the next twelve months, and a quarter (23%) say a 1.5% growth rate is achievable, while 3.5% of investors think the region will grow by 2% in 2014. Some investors were slightly more cautious, with 20% predicting a lower 0.5% growth rate. Only 5% of investors believe Europe will not grow at all.

More than half (54%) of investors believe equities will be the best-performing asset class in 2014 - with Spanish (70%), German (59%) and Greek (54%) investors being the most bullish. A further third (31%) of investors consider alternative investments and hedge funds to be the other asset class winner for 2014, with respondents in the Netherlands (67%) and Switzerland (32%) particularly supportive. Investors generally agree that fixed income will not deliver the performance of the past 20 years, and less than 5% expect the asset class to be a good performer in 2014.

Europe is expected to be the best performing equity market in 2014, leading the way with 39% of investors' votes. However, other markets are also listed: 35% believe the US will be the strongest performing equity market; 15% say Emerging Markets will outperform other regions; and 12% believe Japan could perform the best.

For fixed income investments, well over half (59%) of investors consider extended credit (high yield, loans, peripheral debt) to be the best performer for 2014. This was followed by Emerging Markets debt (18%), core/traditional fixed income (12%) and finally, cash (11%).

The survey also asked investors whether they plan to commit additional cash to investing in 2014. More than half (52%) revealed they plan to do so through additions to equities, while 18% are willing to commit more cash to alternatives. Roughly one in five (18%) investors would rather hold cash at current levels, while 8% are willing to increase cash positions and even reduce market exposure.

Slower growth in China was the key concern for investors last autumn. This perception, however, has now shifted. According to the study, the geopolitical/political environment is now the key risk for markets for 33% of European investors in 2014.. Other concerns include the Fed's exit from quantitative easing (30%), Europe turning to deflation (21%), and equity valuations being too high (17%).



César Pérez, Chief Investment Strategist for J.P. Morgan Private Bank in EMEA, commented: "Tail risks in Europe have subsided and the continent is going through a transitional phase, from recession to modest economic growth, so we are positive on European growth in 2014 and expect it to peak between +1 per cent and +1.5 per cent. However, while we are positive in our market outlook for 2014, we would like to see evidence of real growth in Euro-area GDP and company earnings this year - it's 'show me the money' time. If markets were to rally further ahead of the economic recovery and earnings growth this year, there is still a risk that valuations might overshoot." 

César Pérez continued: "Equity markets performed well last year against a backdrop of improving growth, and we expect them to perform well again in 2014. Japan and Europe, in particular, should benefit from strong earnings growth which should drive equity markets in these countries to higher levels. When it comes to fixed income investments, while we expect only marginally positive returns for US high grade bonds in 2014, we still forecast positive total returns from high yield and leverage loans, and therefore, maintain a reduced overweight position in extended credit."

César Pérez concluded: "Given the outlook for 2014, it is reasonable that investors are willing to commit additional cash to investing this year, and as 2014 progresses, we expect consensus to be proven right: Stocks will beat bonds. Many investors have carried large cash positions over the past few years and have missed out on strong returns for risk assets, especially equities. We believe 2014 will be another year in which it pays to be invested."

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*J.P. Morgan Private Bank recently discussed views on market outlook with more than 900 clients across 15 European cities, (January to February 2014). Throughout these conferences, attendees participated in J.P. Morgan Private Bank's Private Client Survey, which has become a barometer of the thinking and investment behaviour of private clients across the region. Attendees were polled regarding their views on key risks for the next 12 months, investment sentiment and their anticipated portfolio positioning. 

About J.P. Morgan Private Bank
With client assets of $977 billion, J.P. Morgan Private Bank is a global financial leader providing advice and customized solutions to wealthy individuals and their families. The firm leverages its broad capabilities in investing, tax and estate planning, family office management, philanthropy, credit, and special advisory services to help our clients advance toward their own particular goals. For more than 160 years, the Private Bank's comprehensive and integrated approach, commitment to innovation and integrity, and focus on client service have made J.P. Morgan the advisor of choice to those of significant wealth around the world.

About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.5 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com. 

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