CFA Society Forecasting Dinner 2017 Survey Donath Business & Media Herzmann CFA Society Forecasting Dinner 2017 Survey Final survey report March 2017 © Donath Business & Media & Herzmann consultancy, March 2017 1 CFA Society Forecasting Dinner 2017 Survey Dear reader, We are happy to present to you the final report of another of our traditional surveys, conducted on the occasion of the annual CFA Society Forecasting Dinner 2017, organized by the CFA Society Czech Republic. Again this year, in cooperation with Donath Business & Media and the consulting company Herzmann, we selected questions related to the recent developments in Czech economy. Given that this is a year of parliamentary elections, we could not avoid engaging in a certain degree of political stock-taking. We hope you find the results of the survey interesting. Marek Jindra, CFA President CFA Society Czech Republic © Donath Business & Media & Herzmann consultancy, March 2017 2 CFA Society Forecasting Dinner 2017 Survey Table of contents About the survey .......................................................................................................................................... 4 Key findings .................................................................................................................................................. 5 Assessment of government policies .......................................................................................................... 6 What to expect from parliamentary elections .......................................................................................... 8 The CNB’s exit and the future rate of the crown .................................................................................. 11 What to do with the budget surplus? ...................................................................................................... 14 The best money man ................................................................................................................................. 18 About the respondents .............................................................................................................................. 20 Statement on free distribution .................................................................................................................. 21 © Donath Business & Media & Herzmann consultancy, March 2017 3 CFA Society Forecasting Dinner 2017 Survey About the survey The survey was conducted on the occasion of the 15th annual CFA Society Forecasting Dinner 2017, organized regularly by the CFA Society Czech Republic. The theme of the annual meeting of leading domestic and foreign economists, held this year under the auspices of Governor Jiří Rusnok of the Czech National Bank, is a discussion of the trends in the Czech economy and on the global markets. The PR agency Donath Business & Media, in cooperation with the consulting company Herzmann, conducted the on-line survey for the CFA Society Czech Republic on January 16-30, 2017. The purpose of the survey was to map out the views of economic and financial experts on selected aspects of the Czech economy and on some general social issues. Invitations to take part in the survey were extended to: members of the CFA Society Czech Republic, and candidates of the CFA Program; leading figures of the Czech business and financial sector (VIPs); readers of the electronic bulletin The Fleet Sheet's Final Word. The questions focused on: monetary policies of the Czech National Bank; fiscal policies of the Czech government; assessments and expectations of political trends. A total of 1,593 respondents took part in the survey. The invitation was extended to 8,855 individuals, i.e. the rate of response was 18%. The respondents’ views of the matters polled are described below. © Donath Business & Media & Herzmann consultancy, March 2017 4 CFA Society Forecasting Dinner 2017 Survey Key findings National Bank intervention to end by mid-year, financial sector says Only one-fifth (20.5%) of the respondents from the financial sector believe that the ČNB will end its currency intervention later than mid-2017. More than two-fifths (43.0%) expect the exit earlier than the mid-year date indicated by the central bank. Most respondents (54.9%) expect the crown to grow stronger in the 12 months after the end of the intervention and do not expect the ČNB to resume the intervention. This view is held most strongly by the VIP and CFA groups (71.2% and 70.2%, respectively). One-fifth of all respondents (19.4%) believe a stronger crown rate could make the ČNB resume its intervention. Whilst the majority agree that the rate of the crown will likely grow stronger in the one-year period after the exit, the forecasts for the rate immediately after the lifting of the intervention measures are not that uniform. About one-third of the respondents (36.1%) expect a jump in the rate of the crown of more than 5%, whilst another third (33.5%) expect a less dramatic change of less than 5%. Only one-fifth (19%) foresee a merely slight change in the value. Most VIP respondents (53.4%) expect the change to be up to 5 per cent. Only 27.1% expect an abrupt change of more than 5%, as against 40.3% of the financial-sector respondents. The current government parties most likely to form the post-election cabinet The election year is an opportunity to review the degree to which the current government coalition has fulfilled its election promises. The majority of those polled (56.8%) believe that the coalition cabinet has failed to fulfill most of its pre-election pledges. In our 2014 survey, just after the formation of the current government, 42.9% of the respondents expected the new cabinet to contribute to the prosperity of the nation, whilst just as many expected the cabinet to harm the economy. Compared with these expectations, only a negligibly larger segment of the respondents (45.3%) now see the real contribution of the government to the Czech economy as positive; the number of critics has grown by a slightly larger amount (to 46.0%). The majority of the VIP (52.1%) and CFA (53.5%) respondents, as well as those from the education sector (59.9%), view the coalition government positively; businessmen and private-sector respondents in general see it rather negatively (52.0%). The vast majority of the respondents believe that television (88.3%), internet media (86.6%) and social networks (83.3%) will be most influential in this year’s elections. According to 93.7% of the respondents, ANO will be in the next cabinet, whilst 63.9% expect KDU-ČSL to make it, and 58.6% believe ČSSD will be there. The most hopeful of the opposition parties is STAN, though only 28.3% expect it to be part of the next cabinet. Janota the best post-1989 Finance Minister, finance sector loves Kalousek No contender for the best post-1989 Finance Minister won the majority of the votes. The winner is the caretaker minister Eduard Janota (25.3%), followed by the current minister Andrej Babiš (21.9%); Miroslav Kalousek ended up third (16.7%), closely followed by the father of the economic transformation, Václav Klaus (16.1%). Quite interesting is a comparison of the results by the respondent’s sector. Janota and Babiš are the winner and the runner-up in the sectors of business, public administration and education, whilst the financial sector voted for Kalousek (25.6%), with Babiš ending up fourth (14.8%). Almost three-fifths of the respondents (57.5%) believe the experience of Minister Andrej Babiš from the management of his firms affects the national economy. Less than one-fifth (17.9%) see the effect as negative, whilst almost twice as many (39.6%) view it positively. One-third (35.5%) believe his experience has no significant effect. Men trust Babiš more often than women (whose view about him is more ambivalent). What should the government do with the budget surplus? The majority (57.7%) favors using it to repay the national debt. Almost one-fifth of the respondents (19.5%) would spend it on one-off investment projects, and 15% would keep it as reserve. Although most respondents support the use of the treasury surplus to pay back the debt, more than four- fifths (80.6%) believe the government should invest more in the long term. © Donath Business & Media & Herzmann consultancy, March 2017 5 CFA Society Forecasting Dinner 2017 Survey Assessment of government policies Q1: The current coalition Cabinet has fulfilled most of its election-campaign promises. VIP 44.3% 32.8% 5.7% 15.6% CFA 34.7% 31.6% 3.1% 30.6% FSFW 34.5% 37.5% 18.1% 9.0% The election year offers an opportunity to review the degree to which the government coalition has fulfilled its campaign promises. The majority of the respondents in the 2014 CFA Society survey supported the creation of a coalition of ČSSD, ANO, and KDU-ČSL, although skepticism prevailed about whether the campaign promises would materialize. Only about a third of respondents (35.2%) now see most promises as being fulfilled. VIP respondents (mostly top management, financial sector, age group 45-54) view the coalition more positively: 45.9% of them see most of the promises as being fulfilled, 38.5% as unfulfilled. © Donath Business & Media & Herzmann consultancy, March 2017 6 CFA Society Forecasting Dinner 2017 Survey Q2: Have the policies of the current coalition Cabinet helped or harmed the Czech economy? Helped significantly 2014 4.0% Helped somewhat 4.4% 8.7% 14.2% Harmed somewhat 14.8% 9.3% Harmed significantly 38.5% Do not know 41.3% 33.6% 31.2% Certainly