News Release

Embargoed until 1000 EDT (1400 UTC) 12 July 2022

S&P Global Investment Manager Index™ (IMI™)

Recession worries drive increased risk aversion in July

 Investors have become more risk averse and The Risk Appetite Index from S&P Global’s Investment
more pessimistic about near-term returns Manager Index™ (IMI™) monthly survey, which is based
on data from around 100 institutional investors operating
 Macro economy, monetary policy and geopolitics
funds with assets under management of around $845bn,
weigh on sentiment
fell from -8% in June to -16% in July, representing a
 Consumer discretionary and real estate more out worsening of risk appetite.
of favor, sentiment towards energy also fades
Although the degree of risk aversion remains less severe
 Previous end-2022 bullishness for commodities than seen between March and May, expectations of
and equities has fallen negative, with only the near-term US equity market returns have fallen further,
Chinese equity market expected to gain value hinting that the market could lose some of the gains
seen since the June survey.
Data collected 5-10 July 2022
What’s driving the market in the near term?
Risk appetite Expected returns (% survey net balance*)
Negatve Positive
Risk appetite for next 30 days, % net balance Expected US equity market performance contribution contribution
60%
Greater risk tolerance Shareholder returns
40% Greater expected gain
50% Valuation vs historical

40% 30% Equity fundamentals

Government fiscal policy

30%
20%
US macro-economic environment
20%
Political environment
10%
10%
Central bank policy

0% 0% Global macro-economic environment

-100% -75% -50% -25% 0% 25%

-10%
-10%
Source: S&P Global.
-20%
-20%
-30% The only factor providing any support to the market is
-40%
Greater risk aversion -30% Greater expected loss shareholder returns. All other factors are seen as
Apr
May

Aug
Sep
Jan '21
Feb
Mar

Jan '22
Feb
Mar
Apr
Oct '20
Nov
Dec

Dec
Jun

Oct
Nov
Jul

Jun
Jul

increasing drags on equities, with the exception of

May
Apr
May

Aug

May
Jan '21
Feb
Mar

Jan '22
Feb
Mar
Apr
Oct '20
Nov
Dec

Jun

Oct
Nov
Dec
Jul

Jun
Jul
Sep

Source: S&P Global.

valuations, where the perceived negative drag has
eased to the lowest yet recorded by the survey.
US equity investors have become more risk averse in
The biggest drag is considered to be the global
July and increasingly gloomy regarding near-term
macroeconomic environment, where the adverse impact
market performance, according to the latest survey data.
is seen as the highest in the survey history. Similarly, the
The worsening of sentiment reflects growing concerns
US macroeconomic environment is now seen as the
over the macroeconomic outlook, with rising recession
most adverse for US equities since the survey began in
risks aggravated by higher interest rates and headwinds
late-2020.
from the political environment and fiscal policy. Some
80% of survey respondents see a mild recession as Downward pressure on equities from central bank policy
already being priced into the US equity market, but one- has meanwhile risen to the second highest yet recorded,
in-six see recession not yet priced in. Consumer and a new survey high is seen for the drag from equity
discretionary and real estate are the most out-of-favor fundamentals. With the war in Ukraine ongoing, the drag
stocks, but energy saw the largest drop in sentiment. from the political environment remains among the
highest in the history of the survey, with an
Looking towards the year end, sentiment has now turned accompanying survey-record pull on equities from fiscal
negative for all major asset classes, now including policy adding to the gloom.
commodities and equites, with only the Chinese stock
Continued…
market expected to gain value.

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News Release

Sector outlook for the next 30 days What is your outlook for the following equity
(% survey net balance*) markets for year-end 2022?
Bearish Bullish
Score based on % of respondents reporting bullish/bearish views on a scale of -5 to +5
Healthcare
Bearish Bullish
Energy
China
Communications services
Rest of Asia
IT
US
Utilities
Japan
Consumer staples
Latin America
Financials
UK Jul-22
Industrials Apr-22
July European Union
Basic materials
June -2.0 -1.5 -1.0 -0.5 0.0 0.5
Real estate
Source: S&P Global.

Consumer discretionary
For equity markets, only mainland China is expected to
-75% -50% -25% 0% 25% 50% 75%
gain value by the end of 2022. The remaining markets
Source: S&P Global.
were more bearish, with bearish sentiment most overt
Looking at sector allocations, Healthcare moved into the across the European Union and the UK.
most-favored sector spot in July for the first time since In comparison to the April results, market conditions
August of last year, with a dramatic slide in sentiment have retreated across all markets bar one (China). The
having pushed Energy into second place. largest deterioration was seen across Latin America,
All other sectors have fallen out of favor, notably Basic followed by the US, reversing the bullish view reported
Materials and Financials. However, the lowest appetite is three-months back.
again recorded for Consumer Discretionary, followed by What, in your view, is already priced into US
Real Estate, encapsulating the survey participants’ equities?
growing concerns of the rising cost-of-living and
Substantial
increased borrowing costs. recession, 4% No recession,
16%

Broad asset class year-end 2022 outlook

Score based on % of respondents reporting bullish/bearish views on a scale of +5 to -5

Bearish Bullish

Commodities

Equities

Mild recession,
Corporate credit
80% Source: S&P Global
July survey
Sovereign debt April survey A special question of IMI survey respondents in early
July asked the extent to which investors considered a
-2.0 -1.5 -1.0 -0.5 - 0.5 1.0 1.5 recession to be already priced into US equities. A mild
Source: S&P Global IMI survey.
recession is considered to be priced in by some 80% of
Looking at broader asset classes, corporate credit is investors, with a more substantial recession priced in by
expected to see the biggest losses by the year end, but just 4% of respondents. One-in-six respondents believe
investors also see equities, commodities and sovereign that the market has not priced in a recession.
debt as losing value. By comparison, the prior (April)
survey of broad assets classes found investors to be
bullish in relation to equities and, to a lesser extent,
commodities, for year-end. * The net balance figures show the percentage of reporting an
improvement/increase/positive response minus those reporting a
deterioration/decrease/negative response. Those reporting a high
increase/decrease count with a double weight.

Continued…

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News Release

For a copy of the full report and data, please

Commentary
contact [email protected].
Commenting on the survey, Chris Williamson,
Executive Director at S&P Global Market
Intelligence and report author, said:
“Recession worries are haunting US equity
investors, driving renewed risk aversion and For further information, please contact:
expectations of further market losses in the near Katherine Smith, Public Relations
term. Macroeconomic worries are seen as the
Telephone +1 781 301 9311
biggest drag on the market, accompanied by
E-mail [email protected]
concerns over the impact of higher interest rates
and the uncertain geopolitical environment caused
by the war in Ukraine.
“By sector, the surveys points to consumer
discretionary stocks and real estate being the most
out of favor, reflecting the combination of the cost-
of-living crisis and tightening financial conditions.
However, sentiment has now also soured towards
financials, basic materials and even energy amid
slowdown worries, leaving the traditionally
defensive healthcare sector as the only sector
seeing any significant interest from the survey
panel.
“The bearish mood has also extended beyond
equities to now encompass commodities, reflecting
the increased risk of recession that markets are
pricing in. However, the gloomiest outlook for the
rest of the year hangs on corporate debt, as even a
mild recession combined with rising borrowing
costs bodes ill for corporate earnings and debt
repayment.”

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News Release

Note to Editors
This 21st edition of the Investment Manager Index™ (IMI™) survey includes data collected between 5-10 July 2022 from a panel comprising
approximately 100 participants employed by firms that collectively represent approximately $845 bn assets under management.
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