Global perception of the industrial sector is bearish, according to a new sentiment survey. Mining, machinery, and materials are the sectors most expected to continue to struggle in 2016.
Corbin Perception, a Hartford-based investor research and investor relations advisory firm, released its quarterly Industrial Sentiment Survey today, finding a deeply pessimistic mood surrounding the sector among global investors and analysts.
The survey, based on responses from 39 investors and analysts globally who follow the industrial sector and manage $2.3 trillion in total assets, reveals that nearly 70 percent of respondents perceive that the industrial sector has already dipped into recession, Corbin Perception said in a statement. With the S&P 500 dropping 8 percent in the first two weeks of 2016, industrials face continued pressure this earnings season.
Driving the dour mood among respondents: A total of 61 percent expressing bearish sentiment said they are very concerned about oil and energy headwinds, while 55 percent cite China as a top concern. Half are also uneasy about other emerging markets.
The report also said the outlook for earnings and 2016 annual guidance is a slippery slope for industrials. While cost-cutting initiatives should offset decelerating top-line growth to provide some earnings support, a majority of buy-side (58 percent) and sell-side (54 percent) respondents expect earnings to be worse than consensus. Eight out of 10 investors also believe annual guidance will be lower than consensus compared with 67 percent of sell side contributors.
“This earnings season will be a litmus test for this normally resilient sector. Will industrials be able to protect their earnings base in the face of unquestionably decelerating growth and have their valuations already priced in the bad news for 2016?” Rebecca Corbin, founder and managing partner of Corbin Perception, said.
Not all is negative, though. Among specific industries, sentiment remains positive on construction and building products.
