MacroScope

Not bullish enough! How predictions for stocks in 2013 are turning out

The bulls were out in force again in Thursday’s quarterly Reuters poll of around 350 equity analysts – some 91.3 percent of forecasts for 20 major stock indexes predicted gains from here until the end of next year.

That might sound incredibly optimistic – but last year, on the whole, they weren’t optimistic enough.

Most striking is how the consensus completely missed the Nikkei’s near-50 percent rise. U.S. stocks have strongly outperformed the expectations too. On the other side, the emerging markets have been a big disappointment, especially Brazil.

But it’s also worth noting forecasters were very accurate in many cases, being within 5 percent of the Dec 11 close in eight out of the 20 indexes. Of course, all this could change in the final trading days of the year, but this chart gives an idea on how analysts have fared over the last year. Click to enlarge

Stocks to rise? 85 percent say yes – as ever

Even a government shutdown and the prospect of an unprecedented U.S. government default – no matter how small – couldn’t shake the conviction among equity analysts that stock markets only have further to rise.

Published on Tuesday, the latest Reuters poll collected more than 450 points of data from hundreds of analysts worldwide on how 20 of the world’s biggest stock markets will perform from now until the end of the year.

Some 85 percent of forecasts predicted a positive return for stock markets between now and end-December. Thursday brought firming hopes of a  deal to ensure the U.S. does not default on its debt, and global shares have lifted for a second day on Friday. That strong consensus could well prove correct.

Olé! Getting to grips with the stock market bulls


The stock market bulls were out in force again in the latest Reuters poll of equity analysts and investors, conducted this week.

Taking the consensus at face value, further gains for stock markets look a sure-fire bet. However, their forecasts ought to be taken with a dose of common sense and a basic grasp of how the past has panned out.

Part of the reason for their optimism is simple herd mentality – that a positive view of the stock market will be mutually reinforcing.

New twist in Hungary’s Swiss debt saga. Banks beware.

A fresh twist in Hungary’s Swiss franc debt saga. The ruling party, Fidesz, is proposing to offer mortgage holders the opportunity to repay their franc-denominated loans in one fell swoop at an exchange rate to be  fixed well below the market rate.  This is a deviation from the existing plan, agreed in June, which allows households to repay mortgage installments at a fixed rate of 180 forints per Swiss franc (well below the current 230 rate). Households would repay the difference, with interest, after 2015.

If this step is implemented and many loan holders take up the offer, it would be terrible news for Hungary’s banks. The biggest local lender OTP could face a loss of $2 billion forints, analysts at Budapest-based brokerage Equilor calculate.  Not surprisingly, OTP shares plunged 10 percent on Friday after the news, forcing regulators to suspend trade in the stock. Shares in another bank FHB are down 8 percent.

But Fidesz’ message is unequivocal.  ”The financial consequences should be borne by the banks,”  Janos Lazar, the Fidesz official behind the plan says. The government is to debate the proposal on Sunday.