The latest measure of investor sentiment shows UK investors are Europe’s gloomiest, dragged down by Brexit uncertainty, with only Italy competing on pessimism.
Data from UBS Wealth Management’s fourth-quarter 2018 Investor Sentiment Survey shows that local concerns are permeating the confidence of UK investors at a global, regional and individual level.
More than half (55 per cent) are worried about the effect of domestic politics on their investments, compared with 43 per cent among EMEA investors. The only market feeling similar levels of anxiety is Italy at 53 per cent.
The poll of 3,425 global investors with over $1 million to invest showed that less than a third (28 per cent) of UK investors now feel optimistic about the European economy in the next 12 months, compared with 53 per cent of investors in EMEA. Only a fifth in the UK remain confident about the global outlook.
The UK is due to leave the EU in just over a month with no precipitous outcomes ruled out, including a General Election, leaving on 29 March on WTO terms, delaying Article 50, and taking a number of EU exit options back to the people to decide.
Although Brexit’s toll on investors is not surprising, the figures show how divergent expectations have become between UK investors and their more upbeat neighbours.
Also telling is the deteriorating view among UK business owners, with a quarter broadly pessimistic about their own business outlook for 2019, compared with just 12 per cent among EMEA investors.
“UK investors seem to have dramatically lowered expectations for 2019 in almost every sense, from expected financial returns to their outlook for the economy,” said Nick Tucker, head of UK domestic at UBS Wealth Management.
This sense of Groundhog Day is borne out by the fact that more than half of UK investors (55 per cent) left their stock market investments unchanged in 2018.
Local factors are knocking confidence elsewhere, such as Italy, "but compared to EMEA, the UK sentiment certainly seems to be the hardest hit,” said Tucker.
“For the time being, investors are right to remain wary of taking directional views on sterling and UK assets, with the search for greater clarity ongoing.”