This Exclusive Dataset Shows Why Investor Optimism Is Surging

Has the economy reached a turning point? Institutional investors seem to think so.

Asset managers and allocators surveyed for theII Fear Indexreported a sharp increase in optimism this week regarding the economic prospects of their countries. Thirty-six percent said they felt more optimistic this week compared with the previous week — a 12-percentage-point jump from last week’s index.

It’s the highest increase in optimism recorded by the II Fear Index so far, and the first time that optimistic responses outweighed pessimistic responses. Among this week’s 170 respondents, 28 percent felt less optimistic this week about their economic prospects, while 35 percent felt the same as last week.

Still, investors indicated that it will take some time for the economy to fully recover. Asked about unemployment, most respondents said it would most realistically take until next year before there is a 50 percent reduction in their countries’ national unemployment rates. But the highest proportion — 26 percent — said their unemployment rates would be halved by the end of the first quarter.

[II Deep Dive:The II Fear Index: No Business-as-Usual Anytime Soon]

Elsewhere in this week’s survey, respondents continued to place increasing importance on stabilizing the economy over limiting the spread of Covid-19. Fifty-three percent of respondents said governments should prioritize economic stability over public health, an increase from 50 percent last week and 42 percent a month ago.

Thus far, respondents have been largely unimpressed with the economic leadership of their national governments, a trend that continued this week. Forty-three percent reported that they felt less optimistic this week about how their national governments are handling economic affairs, compared with 21 percent who reported an increase in optimism.

This week,IIalso asked institutional investors about the potential impacts of civil unrest around the globe, including anti-racism protests in the U.S. and demonstrations against the Chinese government in Hong Kong.

While a majority of respondents said that the protests would affect the economic recovery of the affected countries, nearly half predicted there would be only a “short-term disruption.” Investors offered similar views on international trade and market volatility, with the vast majority expecting that the protests would not have lasting effects in these areas.

Respondents expected a much larger impact on domestic politics, with 42 percent predicting that the civil unrest would lead to long-term political change. Forty-six percent said the disruption would be short-lived, while just 12 percent believed protests would have “little or no sustained effect.”

More results from the II Fear Index poll continue below. To contribute to the index, pleaseregister here.