Investor mood off lows

Q3

Investor mood dropped as the number of Covid-19 cases increased, according to Questex’s third quarterly Investor Sentiment Assessment, in partnership with ABP Invest.

The study reported that this was off lows at the start of the pandemic, with investors remaining positive about the sector. 

The assessment found that 53% of investors expected economic conditions to improve over the next 12 months, compared to 41% who expected them to deteriorate.  At the extremes, 9% expected a significant improvement with 17% expecting a significant deterioration. 

The largest shift in expectations came from those expecting a Significant Improvement in economic conditions over the next 12 months; they represented 9% of investors in this quarter’s assessment, down from last quarter’s 22% and Q1’s 13%. 

Thanos Papasavvas, founder & CIO, ABP Invest, said: “We believe this downgrade of economic sentiment has been driven by the latest significant upsurge in Covid-19 cases, especially in Europe, with different types of lockdowns implemented across some countries.   It is worth noting, therefore, that the latest downgrade in economic outlook is Covid-19 related and not through adverse macroprudential developments from policy makers and central banks. 

“In fact, in our view the unprecedented fiscal and monetary support will remain supportive so as to avoid an economic crisis turning to a socio-political crisis with more significant longer term effects.”

Fifty-two per cent of investors had a positive investment sentiment for hotels for the ensuing 12 months, with 26% Neutral and 22% Negative investment sentiment. Unlike the divergence observed during Q2 Assessment between expected economic conditions and hotel investment sentiment, this quarter they have converged.  

Compered to the first and second quarters, there was a recovery in hotel sentiment, with 52% of investors having an ‘Improved’ sentiment for the next 12 months compared to 47% in Q2 and 54% in Q1 - when Covid-19 had not yet fully impacted expectations with respect to extended lockdowns and industry developments. 

 Following the latest upsurge in Covid-19 since the summer, there has been a reduction of investors considering themselves to be ‘Net Buyers’ of hotels for the ensuing 12 months.

In the inaugural assessment in Q1, 80% of investors expected to be Net Buyers of hotels; this came down to 78% in the Q2 Assessment and had now dropped to 62%.