Sovereign wealth funds reveal COVID-19 impact on global economy

Developed markets are best able to return to pre-COVID trend growth

  
Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020.

Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020.

REUTERS/Brendan McDermid

A recent study revealed how sovereign wealth funds (SWFs) are looking at the near-term investment environment.

The report published by The International Forum of Sovereign Wealth Funds (IFSWF) and investment manager Invesco surveyed 24 SWFs at the end of June.

According to 61 percent of the survey participants, developed markets are best able to return to pre-COVID trend growth, compared to 26 percent for emerging markets and 13 percent for frontier markets.

For the currency of domination that will offer the most attractive investment destination for equity, 71 percent believe that it will be the US dollar.

SWFs expect the geopolitical and macroeconomic environment to be dominated by tensions between the United States and China, with emerging economies largely aligning with China, but with the European Union being caught in between.

The key event in the next twelve months is believed to be the US presidential election in November.

For oil prices, 27 percent of respondents said they predict prices to follow the global growth cycle, while also 27 percent said that OPEC, Saudi/Russia will drive the oil price and 20 percent predicted that oil prices will surge again following the recovery.

Overall, SWFs also expect that the global economy will be facing a few bumpy quarters ahead.

(Writing by Gerard Aoun; editing by Seban Scaria)

(gerard.aoun@refinitiv.com)

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© ZAWYA 2020