The CFA Institute Global Market

Sentiment Survey is part of the

Future of Finance initiative, a long-

term global effort to shape a

trustworthy, forward-thinking

financial industry that better serves

society. The initiative provides the

tools to motivate and empower the

world of finance to promote

fairness, improved understanding,

and personal integrity. Its success

is driven by ongoing input from an

advisory council of prominent

global leaders and others in the

financial community.

ABOUT THE SURVEYThe CFA Institute 2015 Global Market Sentiment Survey was created to seek input from CFA Institute members and to gather feedback on market sentiment, performance, and market integrity issues and to further our mission of promoting ethical and trustworthy investment markets.

METHODOLOGYAn online survey was conducted from 14 to 28 October 2014. All CFA Institute members globally (119,817) were invited to participate in the survey; 5,259 responded, for an overall response rate of 4% and a margin of error of ±1.3%.

CONTENTS

1

2

3

4

5

6

7

8

Market Predictions

Economic Outlook

Employment Prospects

Trust in Practitioners

Market Integrity

Market Structure

The Way Forward: Implications for Action

Respondent Profile

The United States and China remain the top picks for equity market performance in the coming year, as was the case in the 2014 survey.

1

MARKET

PREDICTIONS

Top Picks for Equity Market Performance:

MARKET

PREDICTIONS

MARKET EuroStoxx 50 (SX5E) – As of 31 December 2015

Indicates Netherlands responses.

Global Average for Predicted Close: 3,283

PREDICTIONS

2000-2199

2200-2399

2400-2599

2600-2799

2800-2999

3000-3199

3200-3399

3400-3599

3600-3799

3800-3999

4000-4199

4200-4399

0% 0%

4%

1%

5%

14%

40%

26%

6%

1%2%

0%

Note: Total percentage may not add up to 100% due to

rounding

S&P 500 (SPX) – As of 31 December 2015MARKET

PREDICTIONS

Indicates Netherlands responses.

Global Average for Predicted Close: 2,066

1750-1799

1800-1849

1850-1899

1900-1949

1950-1999

2000-2049

2050-2099

2100-2149

2150-2199

2200-2249

2250-2299

2300-2349

2350-2399

0%

7%

2%

9%

11%

23%

8%

17%

5%

16%

1%

0% 0%

Note: Total percentage may not add up to 100% due to

rounding

MARKET

PREDICTIONS

Nikkei 225 (NKY) – As of 31 December 2015MARKET

PREDICTIONS

13000-13499

13500-13999

14000-14499

14500-14999

15000-15499

15500-15999

16000-16499

16500-16999

17000-17499

17500-17999

18000-18499

18500-18999

19000-19499

19500-19999

0% 0%1% 1%

20%

6%

34%

16%

10%

3%

7%

0%1%

0%

Indicates Netherlands responses.

Global Average for Predicted Close: 16,428

MARKET

PREDICTIONS

US Treasury 30-year yield (%) – As of 31 December 2015MARKET

PREDICTIONS

1-1.24 1.25-1.49

1.50-1.74

1.75-1.99

2-2.24 2.25-2.49

2.5-2.74

2.75-2.99

3-3.24 3.25-3.49

3.5-3.74

3.75-3.99

4-4.24 4.25-4.49

4.5-4.74

4.75-4.99

5-5.24 5.25-5.49

5.5-5.74

0% 0%1%

0% 0% 0%

4% 4%

22%

6%

31%

10%

18%

1%2%

0% 0% 0% 0%

Indicates Netherlands responses.

Global Average for Predicted Close: 3.46%

MARKET

PREDICTIONS

Crude Oil Brent ($US/bbl) – As of 31 December 2015MARKET

PREDICTIONS

65-69 70-74 75-79 80-84 85-89 90-94 95-99 100-104 105-109 110-114 115-1190%

5%

8%

14%15%

30%

11%12%

3%2%

0%

Indicates Netherlands responses.

Global Average for Predicted Close: 91

Comex Gold ($US/t oz) – As of 31 December 2015MARKET

PREDICTIONS

800-899 900-999 1000-1099

1100-1199

1200-1299

1300-1399

1400-1499

1500-1599

0%1%

11%

27%

37%

17%

4%3%

Indicates Netherlands responses.

Global Average for Predicted Close: 1,216

Investment professionals surveyed are cautious about prospects for global economic growth in 2015.

ECONOMIC

2

OUTLOOK

POSITIVE GLOBAL FACTORS:CENTRAL BANK POLICIES, JOB CREATION, AND CONSUMPTION

Ch

ina

Ind

ia

Ho

ng

Ko

ng

Sin

gap

ore

US

A

UK

Can

ada

Au

stra

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So

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Af.

..

Ger

man

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Net

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Sw

itze

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Bra

zil0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2%2.2%

1.6% 1.8%1.9%

2.3%2%

1.6%

2.2%

2.6%2.4%

2.1% 2.1%

2.6%2.3%

6.2%

5.8%

3.1%

2.3% 2.2%

1.8% 1.7% 1.6% 1.6%1.2%

1.0% 0.9% 0.9%

0.5%0.3%

Global Growth Rate Local Growth

2015 Expected Global and Local GDP Growth Rates(Top 2 responses by market)

ECONOMIC

OUTLOOK Biggest Positive Impact on Your Local Market in 2015(Top 2 responses by market)

Ind

ia

Ch

ina

US

A

So

uth

Af.

..

UK

Ger

man

y

Can

ada

Ho

ng

...

Sin

gap

ore

Au

stra

lia

Jap

an

Sw

itze

r...

Net

her

l...

Bra

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Fra

nce

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

87%

80%84%

63%

76%

67%

85%

68% 69%

81%

52%

85% 87%

73%

82% 83%87%

63%

82%

67%

87%

77%80%

85%

77%82% 80%

77%

88%

79%

Political Stability in Home Market Progress of Recovery in Europe Progress of Recovery in China

Although the world economy is expected to grow, optimism is tempered by concerns about the potential for continued weakness in developed economies as well as the ongoing effects of political instability.

GLOBAL RISKS

Biggest Risk to Global Markets in 2015*Both responses shown when top choices are within margin of error.

ECONOMIC

OUTLOOK

Of the CFA Institute members surveyed, 57% said that attempts by central banks to end quantitative easing will have a negative impact on their local market, down from 68% last year.

51% forecast the effect of energy prices caused by global unrest in Ukraine and the Middle East will negatively impact their local market.

LOCAL RISKS

Biggest Risk to Your Local Market in 2015*Both responses shown when top choices are within margin of error.

ECONOMIC

OUTLOOK

UNDERESTIMATED

RISKS

1. Political risks, including secessionist and nationalistic movements (35%)

2. Demographic trend of aging populations (20%)

Mic

hae

l H/G

etty

Im

ages

ECONOMIC

OUTLOOK

EMPLOYMENT

3

PROSPECTS

Opportunities for investment professionals in India and China brighten.

Local Market Employment Outlook

TRUST IN

4

PRACTITIONERS

Factors Contributing Most to Lack of Trust in the Finance Industry

Lack of Ethical Culture within Financial Firms

Poor Government Regulation and Enforcement

Market Micro Structure

I don’t think there is lack of trust in the finance industry

Other

Firm-level Action Most Needed to Improve Investor Trust and Confidence (Top 2 Responses by Market)

Better Alignment of Compensation with Investor Objectives Zero Tolerance Policy by Top Management for Ethical Breaches Increased Adherence to Ethical Codes & Standards

MARKET

5

INTEGRITY

28% OF MEMBERS HAVE A POSITIVE OUTLOOK ON MARKET INTEGRITY, UP FROM 21% IN 2014.

Members rank the most serious issues facing global markets as market fraud, such as insider trading (25%—similar to last year), and the integrity of financial reporting (24%).

Political risks, including secessionist and nationalistic movements

Impact from the demographic trend of aging populations

Pension plan shortfalls and low levels of retirement savings

Data privacy and cyber threats

Climate change and environmental issues

Other

Most Underestimated Risk to Global Markets

Perspective on Integrity of Global Capital Markets

Ch

ina

Ind

ia

Bra

zil

Ne

the

rl..

.

Jap

an

Fra

nce UK

So

uth

Af.

..

Sw

itze

r...

Au

stra

lia

Sin

ga

po

re

Ho

ng

...

US

A

Ge

rma

ny

Ca

na

da0%

10%

20%

30%

40%

50%

45%

40%39%

35%32%

29% 28% 27% 26%24% 23%

21% 21% 20% 19%

Will Be Better in 2015 than 2014

Ranking of Most Serious Ethical Issue Facing Local Market in Coming Year

Note: Total percentage may not add up to 100% due to rounding

Misaligned incentives of investment management services

Mis-selling by financial advisers

Market fraud

Market trading practices

Integrity of financial reporting

Disclosure/use of financial derivatives

Globally Effective Risk Oversight Wanted.

Globally, 28% of members indicated that improved regulation and oversight of global systemic risk is the regulatory or industry action most needed in the coming year to help improve investor trust and market integrity.

68% cited need for better bank board risk management

68% called for a requirement that banks impair troubled credit holdings on a more consistent and timely basis

67% cited increased coordination of monitoring systemic risk

66% better risk disclosure

REGULATORY REFORMS ARE NEEDED TO PREVENT FUTURE FINANCIAL CRISES

MARKET

6

STRUCTURE

Regulatory or Industry Actions Most Needed in the Coming Year to Help Improve Investor Trust and Market Integrity

Note: Total percentage may not add up to 100% due to rounding

Improved auditing practice and standardsImproved corporate governance practicesImproved enforcement of existing laws and regulationsImproved market trading rules on transparency and frequency of tradesImproved regulation and oversight of global systemic riskImproved transparency of financial reporting and other corporate disclosures

MARKET

STRUCTURE

OUR FINDINGS SHOW THAT THE MOST IMPORTANT AREAS FOR FIRMS TO FOCUS ON ARE:

• Better alignment of compensation with investor objectives

• Zero-tolerance policy by top management for ethical breaches

• Increased adherence to ethical codes and standards

OUR FINDINGS SHOW THAT THE MOST IMPORTANT AREAS FOR REGULATORS TO ADDRESS ARE:

• Improved regulation and oversight of global systemic risk

• Improved transparency of financial reporting and other corporate disclosures globally

• Improved enforcement of existing laws and regulations at the local level

• Improved corporate governance practices locally

THE WAY FORWARD:

7

IMPLICATIONS

FOR ACTION

REGIONAL RESPONSE

52%AMERICAS (AMER)

30%EUROPE, MIDDLE EAST AND AFRICA (EMEA)

18%ASIA PACIFIC (APAC)

TOP MARKETS1,956

572264144143139138131123111108102102

9479

USACANADAUKCHINAINDIAGERMANYSWITZERLANDSOUTH AFRICAFRANCEHONG KONGAUSTRALIANETHERLANDSSINGAPOREJAPANBRAZIL

PRIMARY INVESTMENT PRACTICE (TOP 5)

EQUITIES 33%

FIXED INCOME 17%

PRIVATE 4%

DERIVATIVES 4%

REAL ESTATE 3%

JOB FUNCTIONS (TOP 5)

PORTFOLIO MANAGER 20%

RESEARCH ANALYST 12%

CONSULTANT 6%

FINANCIAL ADVISER 6%

CHIEF-LEVEL EXECUTIVE 6%

NOTE: TOTAL PERCENTAGE MAY NOT ADD UP TO 100% DUE TO ROUNDING

YEARS WORKING IN THE INVESTMENT INDUSTRY

3%NOT APPLICABLE

21%> 20 YEARS

14%16–20 YEARS

17%11–15 YEARS

33%6–10 YEARS

12%≤ 5 YEARS

RESPONDENT

8

PROFILE

RESOURCES

Improving Regulation and Shareholder Rights

Proxy Access in the United States: Revisiting the ProposedSEC Rule

Non-Preemptive Share Issues in Asia: Role of Regulation in Investor Protectio

n

Review of and Comment on SEC Strategic Plan: Fiscal Years 2014–2018, a

comment letter to the US SEC

ESMA Market Abuse Regulation Delegated Acts (ESMA/2014/808), a comment

letter to the European Securities and Markets Authority

Removal of Certain Reference to Credit Ratings and Amendment to the Issuer

Diversification Requirement in the Money Market Fund Rule,

a comment letter to the US SEC

Reducing Global Systemic Risk

CFA Institute cosponsors the Systemic Risk Council to address systemic

issues.

Financial Reporting Transparency

Financial Crisis Insights on Bank Performance Reporting, Part 1 and Part 2

Forward-Looking Information: A Necessary Consideration in the SEC’s Review

on Disclosure Effectiveness

Financial Reporting Disclosures: Investor Perspectives on Transparency, Trust,

and Volume

Disclosure Initiative: Proposed Amendments to IAS 1, a comment letter to the

International Accounting Standards Board

Proposed Statement of Financial Accounting Concepts, a comment letter to the

Financial Accounting Standards Board

Improving Enforcement

Redress in Retail Investment Markets: International Perspectives and Best Pract

ices

Investment Firm Best Practices

CFA Institute continues to administer and update the GIPS standards to provide

best practices for investment performance reporting.

The Asset Manager Code of Professional Conduct now has 1,000+ firms that

claim compliance, with assets under management of more than US$8 trillion.

Investment professionals can share the Statement of Investor Rights with clients

to show their commitment to aligned incentives.

The Future of FinanceStarts with You.

cfainstitute.org/futurefinance@CFAInstitute

@MarketIntegrity#FutureFinance