Stock markets are continuing their 2-month run, but experts say this is a sign of investor complacency.

Deutsche Bank boss Christian Sewing stopped short of accusing investors of pretending the crisis didn’t exist, though he thinks they are too optimistic.

“In my personal view the underlying assumption for this recovery are a bit too optimistic,” he said at an online conference overnight.

“Second and third order effects have not been fully priced in at this stage”.

Deutsche is the best performing major European lender and reported a 13 per cent revenue gain in the first quarter. But Sewing said the bank’s restructure program, initiated last July, was continuing and on track.


No time for complacency

Issuing a similar note of caution was deVere Group boss Nigel Green. He said it was only a small number of stocks driving the upswing.

“There’s an over-riding and far-reaching bullish sentiment in stock markets, however there are bonafide concerns that investors are in danger of becoming complacent,” he said.

“This is because the headline figures of rallying markets are not the best barometers of the economy right now. The upswing on Wall Street, for example, is being driven by a handful of companies all within the same sector: tech.”

Green said this global economic downturn was different to others because there were clear winners and losers, whereas in previous ones it had been far less clear-cut and more a question of how much all firms were impacted.

“This one has produced enormous financial benefits for some, like tech, and left many struggling and others failing completely,” he noted.

“The firms which are ‘winners’ in this downturn are over-represented on many leading global indices, including the benchmark S&P500 index.

“As such, they do not necessarily serve as the ideal economic gauge for investment decisions.”