Fewer are worried about the breakup of the Eurozone: 16 per cent vs. 36 per cent when compared to this time last year

30 per cent say slower growth in China is their biggest concern

70 per cent of investors have improved their sentiment towards Europe since the beginning of the year

Many believe fixed income will not be able to deliver the returns they traditionally expect with 19 per cent believing all fixed income investments will produce negative returns

DUBAI, United Arab Emirates, 10 December 2013

J.P. Morgan Private Bank has revealed the expectations of Ultra High Net Worth and High Net Worth investors across Europe on market conditions, risk appetite and investment sentiment for the next twelve months.

The study* was conducted as part of the Private Bank's recent Investment Insights series (Sept - Oct 2013), held in 16 cities across Europe, with more than 600 UHNW and HNW investors. The survey polled participants' investment views on key risks for the next 12 months, investment sentiment and their anticipated portfolio positioning.

When asked which asset class will outperform over the next 12 months, 48 per cent of participants believe equities will outperform. Yet another 28 per cent of those polled believe private equity to be the other asset class winner over the next year. The remaining 24 per cent were split between hedge funds (9 per cent), commodities (6 per cent), high yield (5 per cent) and core fixed income (4 per cent). UHNW and HNW investors in Spain, the UK, France, and Switzerland were found to have the most optimistic outlook towards equity markets, with 70 per cent, 57 per cent, 48 per cent and 47 per cent, respectively.



Half (50 per cent) of investors polled believe that European markets will be the best equity market performer. This is in stark contrast to the same time last year when sentiment towards the region was at much lower levels (below 30 per cent) as investors saw the greatest opportunities in the US and emerging markets equities. According to the current survey, the US is still thought to be a strong equity market to invest in next year (23 per cent), too, particularly for UK investors (31 per cent).



The survey also asked if investors' sentiment towards investments in Europe had improved since the beginning of the year, and if investors had invested in the region as a result. More than 45 per cent of investors have seen an improvement in Europe and as a result added European equities to their portfolios, with investors based in Munich (68 per cent), Madrid (60 per cent) and Hamburg (59 per cent) having done so most aggressively.

An additional 25 per cent see an improvement but have not yet taken action to invest in European equities, while a further 30 per cent of those surveyed remain skeptical about Europe overall. Whilst 30 per cent of private investors don't see an improvement in Europe, 10 per cent have added to European equities and 5 per cent have sold, after taking into consideration valuations, momentum, and this economic assessment.

As part of the survey, UHNW and HNW investors were also asked what will be the best fixed income investment for the next 12 months. Extended corporate credit (30 per cent) attracted most European investors, especially the French (44 per cent), Irish (41 per cent) and Germans (40 per cent). Elsewhere emerging market debt and absolute return fixed income managers are thought to be the best ways to be invested in fixed income markets, according to 35 per cent of investor.  A significant number of investors across Europe (19 per cent) believe that all fixed income investments will have negative returns over the coming 12 months.

Cesar Perez, Chief Investment Strategist for J.P. Morgan Private Bank in EMEA, commented: "Investors are concerned after China's growth slowdown this summer, which was driven by tightening in social funding.  But China is now back on track to achieve 7 to 8 per cent growth during the next couple of years, thanks to a recovery in economic activity in developed markets."

He continued: "Investors believe equities will be the best performing asset class over the next twelve months. Historically equity markets have performed well in the early stages of rising rate environments, so we agree with investors and see potential for this asset class to outperform over the next year. We also believe the Euro area to be at the onset of an improvement in hard data, such as retail sales. Given higher operating leverage in Europe, even a small increase in growth can translate into improving operating margins and earnings next year. Our models for forecasting earnings growth leads us to expect a 6 to 10 per cent growth rate is attainable next year. We believe equity markets in Europe to offer a good risk-return profile, so we went overweight in the region in October based on better clarity around the sovereign and corporate outlook."

He concluded: "We are underweight fixed income investments. While we prefer extended credit to core fixed income, given low corporate default expectations and robust balance sheets with stronger cash positions, we are continuing the rotation we began last year out of high yield. So far, we have funded additions to equities and hedge funds."

-Ends-

*J.P. Morgan Private Bank recently discussed views on market outlook with more than 600 clients across 16 European cities. Throughout these conferences, attendees - representing a total of $70.9 billion - 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 $935 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 in more than 60 countries. The firm is a leader in investment banking, financial services for consumers, small business and 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.

In the United Kingdom, this material is approved by J.P. Morgan International Bank Limited  (JPMIB) with the registered office located at 25 Bank Street, Canary Wharf, London E14 5JP, registered in England No. 03838766, authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. In addition, this material may be distributed by:  JPMorgan Chase Bank, N.A. (JPMCB) Paris branch, which is regulated by the French banking authorities Autorité de Contrôle Prudentiel et de Résolution and Autorité des Marchés Financiers; J.P. Morgan (Suisse) SA, regulated by the Swiss Financial Market Supervisory Authority; JPMCB Dubai branch, regulated by the Dubai Financial Services Authority; JPMCB Bahrain branch, licensed as a conventional wholesale bank by the Central Bank of Bahrain (for professional clients only). This material should not be regarded as research or a J.P. Morgan research report nor as including sufficient information to support an investment decision and is not intended as an offer or solicitation for the purchase or sale of any financial instrument.  The investment strategies and views expressed herein may differ from the opinions expressed by other areas of J.P. Morgan including research. If you no longer wish to receive these communications, please contact your usual J.P. Morgan representative.

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© Press Release 2013