2006 INVESTOR OUTLOOK: THE GLASS IS
“HALF FULL”
NO NEAR-TERM PROSPECT FOR LOWER RATES FROM THE BERNANKE FED
NEW YORK, December 30, 2005: Despite gloom and doom
predictions from some corners of the market, investors have a generally positive
outlook for economic trends in 2006. According to a survey of 130 institutional
investment professionals conducted this week by capital markets research firm
Broadgate Consultants, a significant majority (85%) rated the probability of a
2006 recession at less than 50% - with over one-third of all respondents rating
the likelihood of a recession as “almost nil.”
Similarly, investors have a sanguine outlook toward many key trends: 75% of
respondents said that the Dow Jones Industrial Average will rise in 2006 and a
quarter of those believe that the average will increase dramatically – to 12,000
or higher. Also, an overwhelming majority of investors (92%) believe that
mergers and acquisitions activity will be will at least on par with 2005. A
significant majority (72%) of respondents said that the number of IPOs will at
least keep pace with 2005 levels, with nearly two-thirds of those believing that
the number will actually increase in 2006.
Over two-thirds (68%) of survey respondents expect that 2006 energy prices will
remain steady or decrease from their current levels. Investor sentiment on the
real estate market was tempered: 58% of survey participants believed that it
will weaken, if only in certain locations, while 17% said that they foresee
broad price declines throughout the U.S. Views on the prospect of near term
interest rate reductions were nearly unanimous: only one percent of survey
respondents said that the Bernanke Fed’s likely first move would be to lower
interest rates.
“Cautious optimism seems to mark investors’ overall outlook for 2006,” said
Thomas C. Franco, Chairman and Chief Executive of Broadgate. “Although
sentiments are subdued with regard to certain segments of the economy, on the
broad issues, investors seem to feel positive – and above all, safe.”
Remarkably, 86% of investors said that the probability of a major terrorist
attack on U.S. soil in 2006 is less than 50%, and almost a third of those
believe that the likelihood is close to nil. Similarly, a majority of investors
believe that the long-term outcome in Iraq will be positive in terms of its
effect on U.S. interests.
About Broadgate Consultants, Inc. Established in 1987, Broadgate Consultants, a Partner firm of PROI, provides
capital markets research and related advisory services to public companies and
private equity firms. More information about Broadgate can be found on the
Internet at www.broadgate.com.
