Some 80% of the 48 delegates polled at the event believe QE 2 would be a good thing, and almost as many of them think equity markets would be the main beneficiary of a possible new round of monetary stimulus by the ECB.
Might these two number be connected? The high number of Catalan investors expressing their intent to increase allocation to European equities in the next 12 months at least suggests so: six in 10 delegates plan to up their exposure. The number of buyers has hovered around this level for more than a year now, and so has the Catalan’s assessment of the consequences of QE.
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Alan Ayres, a client portfolio manager in the Schroders emerging markets equity team who was speaking at the event, agreed with the crowd, expressing sympathy for the ECB’s dovish stance. “I can see why the ECB is going down this road,” he said, though he questioned the long-term impact of currency depreciation brought about by monetary easing. “The only problem I see is that it puts more pressure on global nominal GDP in dollar terms. QE looks like a constant attempt to grab more of a shrinking pie, and it is forcing down nominal GDP in dollar terms.”
Martyn Hole of Capital Group disagreed, arguing that currency depreciation was not anymore by default resulting in efforts to increase market share by companies benefiting from this. “Whilst Japanese companies have taken the opportunity to expand market share in the past [following a devaluation of their currency], now they have been opting to increase their margins, which is of course good news for shareholders,” he said.
