In a recent survey of 103 institutional investors, TheMarkets.com found that 27% of those surveyed think that the market has yet to hit its bottom. For respondents based outside the U.S., the number jumps to 41%.
While levels of market optimism are higher this quarter than they were in the prior two quarters when the same survey was conducted, six months of a growing market have not convinced investors that the worst is behind us.
The survey, reaching professional investors in 20 countries, was conducted by TheMarkets.com, a leading provider of research, estimates and workflow solutions to institutional investors worldwide.
Despite their relative pessimism about the market bottom, respondents based outside the U.S. were more confident about the speed of future recovery than their U.S.-based counterparts, with almost 50% of them expecting the S&P 500 to return to 1500 by the end of 2011, versus 21% of U.S.-based investors. More than half of U.S.-based respondents think the S&P 500 won't return to its pre-collapse highs in the 1500s until 2013 or later.
According to respondents, key sectors of focus for investors over the next year will be energy, financials, and healthcare, in that order.
"Back in March and June, we saw investor focus heavily keyed in to what was going on in Washington, D.C., with financials being the primary focus in March and energy in June," said David Eisner, CEO and president of TheMarkets.com. "Now, energy remains the primary focus. Given that energy is not currently a priority in D.C., this may suggest a shift in focus away from areas being highlighted by the government and more toward fundamental market levers."
In the survey, nearly half of respondents indicated that the price of oil becomes a bearish sign for the stock market at US$100 per barrel, and over 30% think it is a bearish sign at US$125.
"With continued volatility in the energy markets, this oil price sensitivity may be a reason why investors expect continued focus on the energy sector over the coming months," said Eisner.