For Global Executives, U.S. Is Best

Remember the emerging markets? It’s where corporate and portfolio investors wanted to be. Well, today, the new emerging market is the United States. Apparently, President Barack Obama failed at turning us into a bunch of “commie-pinkos.”
PwC annual CEO survey says the U.S. is the place to be this year. It beats out China and other emerging markets for the first time since 2010.
In general, CEOs are more upbeat about developed markets than emerging ones. For the roughly 1,300 respondents to the PwC survey worldwide, the U.S. was the leader with 38% saying it was the most important country for their overall investment strategy in the next 12 months. Last year it was 30%. China also moved up a notch, with 34% saying it was the most important compared to 33% a year ago. Edging out the top three was Germany, with 19% considering it the most important market for overall growth compared to 17% a year ago.

PwC noted that U.S. GDP has averaged 7% higher than before the crisis, and more jobs have been created since that period than were lost. The U.S. economy has also benefited from the fracking boom, and higher consumer spending has helped earnings. The Fed’s QE program kept banks afloat post-crisis, which kept investor sentiment positive. It was hard to lose money in the U.S. stock market since the lows in the S&P 500 back in March 2009. Even so, just two years ago, investors had a Bank of America BAC +2.78% Death Watch going on. Compared to other core economies, the U.S. is best, and CEOs around the world apparently agree.

Survey respondents said that doing business in the BRICs remains challenging. The big four emerging markets are facing complex structural and political reforms impeding growth. CEOs said those markets were still “firmly in their sights”, however.

So what’s to worry about?

Regulators…and hackers.

Some 78% of CEOs said that over-regulation stemming from the financial crisis of 2008 was their biggest concern. That’s up 6% from the 2014 survey. National deficits and debt burdens and rising taxes also remain top threats.

CEOs are more worried about geopolitical and security risks this year than they were last year. On the security side, cyber breaches like those that happened at Sony
Demand for the U.S. market doesn’t make it easier on American businesses. Competition from foreign firms is changing business strategies. Long term is now three years, not 10.
“The challenges thrown up by these changes are set against a competitive landscape that is also rapidly and radically reshaping,” PwC Chairman Dennis Nally wrote in the executive summary in the firm’s Annual CEO Survey. “Competition is now coming from new and previously unseen sources. A wide range of industries is being disrupted by regulatory changes, increasing competition and new patterns of consumer behavior,” he wrote.
The survey found one-third of the CEOs entered new industries in the last three years, and 56% believe their company will be competing in new sectors in the next three years.