Market Research
Investors Shun UK As Brexit Tensions Brew - Data
New data from Lloyds Private Banking highlights how investors have turned their backs on the UK in recent times against a backdrop of uncertainty surrounding the UK's divorce from the European Union.
Investors are now less confident about investing in the UK than
they were in the aftermath of last year’s Brexit vote, new data
shows, after sentiment towards the nation nosedived this
month.
Investor sentiment towards the UK tumbled in September, with
confidence in UK equities taking the hardest knock, according to
Lloyds
Private Banking’s Investor Sentiment
Index.
Confidence in government and corporate bonds was also rattled,
the firm said, but the UK’s equities sector is now at an 18-month
low. Uncertainty shrouding the UK’s plans to strike a deal with
the European Union once it exits could be fuelling this, Lloyds
has suggested.
“With autumn rapidly closing in, it appears that UK investors are
bracing themselves for stormier conditions ahead,” said Markus
Stadlmann, chief investment officer at Lloyds Private Banking.
“Although the scores make for gloomy reading, we think the drop
in sentiment towards UK assets reflects the perception of
expected investment risk. While the UK economy is fundamentally
strong, and there is currently nothing to be overly concerned
about, investors are uncertain about the prospects of investing
in UK shares, bonds and property for the medium and long
term.”
Meanwhile, investors are also far less optimistic about the US
compared to this time a year ago, with Lloyds Private Banking’s
reading having fallen from 9.91 per cent to -2.17 per cent amid
noise that US stock markets are overdue a correction.
Gold, the so-called safe-haven asset class, saw a 2.67 per cent
increase in sentiment this month, and was the asset class that
attracted the highest inflows.
Cash, on the other hand, suffered the biggest drop, as it was
down 5.5 per cent and is now at its lowest level since November
2016 against a backdrop of low interest rates.
“In our view, there are enough signs emerging to suggest that US
growth expectations will be overshot,”Stadlmann continued.
“Furthermore, while we generally think bond markets are
overvalued, we believe that the best relative value can be found
in US treasuries.”