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Business optimism may have peaked – Fidelity Pulse survey

3 November 2020

Rising positive business sentiment could plateau amid a second wave of Covid-19, says Fidelity.

According to its latest Pulse survey, business sentiment improved in October, continuing the trend seen since the peak of the Covid-19 economic disruption. Of the 176 analysts surveyed, 44% said management sentiment had improved in the last month, with only 8% reporting it had decreased.

However, Fidelity warned that October could mark the peak, as the UK and Europe announce fresh lockdowns and rising infection figures.

The data showed a “notable moderation” in the trend of increasing confidence in Europe last month. While management teams in Europe had been the most confident of all regions in September, they were found to be the least confident in October. In contrast, 56% of analysts covering US companies said sentiment improved in the last month to the highest level since July.

Terry Raven, director, European equities, Fidelity International, said: “While it’s pleasing to see a continuing uptick in business sentiment since the peak of the Coronavirus, with such a high proportion of responses, it becomes harder each month to see how the picture can continue to strengthen substantially from here.

“It is possible that October marks a plateau for the rate of improvement in global business conditions.”

The survey also highlighted the growing importance of ESG engagement among investors. While investors and companies still focus primarily on the environmental aspect, Fidelity noted that there is “ever increasing engagement” around social and governance issues too.

Gita Bal, global head of research, fixed income, Fidelity International, commented: “Carbon emission is a key topic and companies are paying more attention to this. There is a very clear acceleration in the importance of engagement in the last six to nine months – management teams are waking up to the power of ESG very visibly.”

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