Investors Shun UK As Brexit Tensions Brew - Data

Josh O'Neill

22 September 2017

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 ’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.”