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Dec. 9 (Bloomberg) -- Global investors, skeptical about President Barack Obama’s ability to turn around the economy, nonetheless aren’t enamored with the Republican alternatives.
While a plurality of investors said Obama’s re-election would be a bad thing for U.S. markets, 57 percent said in a Bloomberg Global Poll that the current contenders for the Republican presidential nomination aren’t offering good ideas to lessen U.S. economic woes.
Globally, Obama ran slightly ahead of Republican Mitt Romney in a hypothetical matchup, 39 percent to 35 percent, when investors were asked whose presidency would be better for the world economy. That’s a reversal from the last poll, in September, in which Romney led Obama, 37 percent to 34 percent.
In the latest poll, Obama beats Republican Newt Gingrich more decisively on the global economy question, 45 percent to 29 percent.
Obama’s advantage is driven by non-U.S. investors. American investors expressed a clear preference for either Republican -- favoring Romney over the president 65 percent to 24 percent, and backing Gingrich 52 percent to 33 percent.
The quarterly poll, conducted Dec. 5-6, surveyed 1,097 investors, traders and analysts who are Bloomberg subscribers, including 419 in the U.S.
“I can imagine re-election of Barack Obama could be a disappointment for U.S. markets in the short term, but his policy could support the global economy,” said Michael Fuxa, 41, a poll respondent and head of investments for uniVersa Life Insurance Co. in Nuremberg, Germany.
Alfredo Viegas, managing director of emerging markets at Knight Capital in Greenwich, Connecticut, said that Gingrich or Romney, working with a Republican-led House of Representatives, would be more likely than Obama to enact changes to entitlement programs, such as Medicare, to control federal spending.
“I do believe their ideas on curtailing the budgetary growth profile of entitlements is reason enough to vote for them,” Viegas, a poll respondent, said in an e-mail.
Thirty-eight percent of global investors said Obama’s re- election would be a good thing for U.S. markets, while 44 percent said it would be a bad thing.
Among investors outside the U.S., 37 percent were optimistic about how Obama’s policies were affecting the business climate, compared with 18 percent in the U.S.
Opinions on Romney and Gingrich among U.S. and overseas investors also diverged.
Investors outside the U.S. gave Romney a 21 percent favorable rating, with 33 percent rating him unfavorably and 46 percent saying they had “no idea.” Gingrich had a 15 percent favorability rating outside the U.S., with 41 percent viewing him unfavorably and 44 percent unsure.
Among U.S. investors, Romney had a 58 percent favorable and 37 percent unfavorable rating. Views toward Gingrich, the frontrunner in polls of the Republican race, are almost exactly the reverse, with 55 percent of U.S. investors rating him negatively and 38 percent favorably.
“Romney has a business and finance acumen that Obama could never match,” said Magnus Ranje, 33, a poll respondent and vice president of Danske Markets Inc. in New York.
While Republicans regularly target Obama administration regulatory policies and the 2010 overhaul of the nation’s health-care industry he pushed into law as major impediments to the U.S. economy, investors overall more commonly identify other obstacles.
Gridlock between Democrats and Republicans is a “substantial” barrier to U.S. economic growth, said 56 percent of global investors, and a “modest” barrier, according to an additional 28 percent.
Uncertainty about the health-care law, which the U.S. Supreme Court is to consider next year, was cited as a substantial barrier by 23 percent and a modest barrier by 41 percent. Twenty-eight percent said regulatory policy is a substantial barrier, and 40 percent said it poses a modest barrier.
One in four investors said widening income inequality is a substantial barrier to economic growth in the U.S.
Improvement for Obama
Obama has regained some standing among global investors since the last poll in September, as concerns of a double-dip recession ebbed.
The U.S. president has a favorable rating of 48 percent and an unfavorable rating of 47 percent, compared with a favorable rating of 39 percent and an unfavorable rating of 57 percent in the September poll. In a May survey, his favorability rating was 55 percent.
Performance of the benchmark Standard & Poor’s 500 Index of U.S. stocks was up 8.21 percent between completion of the last poll, on Sept. 26, and the new survey that ended Dec. 6.
Still, investors are twice as pessimistic as they are optimistic about the effects of Obama administration policies on the U.S. investment climate, 66 percent to 30 percent.
The September poll was completed less than two months after a standoff between Obama and Republican lawmakers over raising the U.S. debt ceiling took the country to the brink of default and led Standard & Poor’s to downgrade the U.S. credit rating.
Since then, investors’ views of Congress have improved, though to a lesser degree than their ratings of Obama.
Investors have a 66 percent unfavorable view of congressional Republicans, down from 68 percent in the last poll, and a 59 percent unfavorable view of congressional Democrats, down from 63 percent.
U.S. investors were more critical of Congress than overseas investors. Congressional Republicans had a 70 percent unfavorable rating among U.S. investors and a 63 percent unfavorable rating among non-U.S. investors.
Congressional Democrats had an 86 percent unfavorable rating among U.S. investors, with 13 percent viewing them favorably. The Democrats received an unfavorable rating from 42 percent of overseas investors and a favorable rating from 39 percent.
Among all investors, 60 percent said raising taxes on the rich is the right way to address dire fiscal problems, a position promoted by Obama. Views diverged among overseas and U.S. investors: 69 percent of overseas investors say raising taxes is the right thing to do while 51 percent of U.S. investors say it’s the wrong approach.
“I am by no means a proponent of paying down debt exclusively by taxing the rich,” poll respondent Levente Mady, managing director of derivatives for Union Securities Ltd. in Vancouver, Canada, said in an e-mail. “But they need to be part of a comprehensive solution where everyone takes less in benefits and pays more in taxes in order to balance the books eventually.”
The tax issue aside, Mady said Romney or Gingrich may be better than Obama for the world economy.
“I don’t necessarily think that Gingrich or Romney are going to do a great job,” Mady said. “Obama had his chance and blew it. It is somebody else’s turn.”
Global tensions with Iran over its nuclear program emerged as a concern in the poll, following the Nov. 29 ransacking of the British Embassy in Tehran by demonstrators, with 65 percent of investors saying they expect a military strike against Iran’s nuclear program at some point.
The United Nations’ International Atomic Energy Agency said in a Nov. 8 report that Iran has continued work on developing nuclear weapons capability. The U.S., U.K. and Canada on Nov. 21 announced financial penalties on Iran, and the European Union on Dec. 1 toughened sanctions.
The quarterly Bloomberg Global Poll is conducted by Selzer & Co., a Des Moines, Iowa-based firm. The margin of error for the entire sample is plus or minus 3.0 percentage points.
--Editors: Don Frederick, Bob Drummond
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