What none of us really know, is how Brexit (and the possibility of Government chaos after the Tories are left wondering about their lost mandate) will affect the UK economy going forward. So, it’s interesting to see how many studies are reaching the IFA Magazine office which say don’t worry, things are fine at the moment.
Is this a case of re-organising the deckchairs on the Titanic as we race towards the iceberg, or is it a genuine sign that we can weather whatever is coming our way?
So, if you’re looking for some good news (and with the British Lions about to take on the All Blacks, we may need this), have a look at the latest study which landed on our desk.
It’s the Lloyds Bank Investor Sentiment Index. The team there say:
Investors positive about UK despite uncertainty caused by ‘snap’ election
- Overall, average sentiment is still high at 6.29%
- UK shares are up 4.82% compared to May
- Gold saw the biggest fall in sentiment but still remains most popular asset class by a long way
UK investor sentiment remains at near record levels despite a slight drop this month, by -0.37%, to 6.29%. Overall sentiment is up 3.87% on this time last year.
Investors are feeling particularly positive towards UK shares. In June, sentiment towards UK shares is up 4.82%, from 8.68% to 13.5%. Over a 12 month view, UK shares are up 7.04% suggesting that investors are more confident about the prospects of the UK than they were a year ago.
UK investor confidence in Europe is also rebounding, aided by greater political certainty such as Macron’s election in France. Eurozone shares saw the biggest rise in sentiment this month with an increase of 5.20% from -17.13% to -11.93%. Although they remain in negative territory at -11.93% suggesting investors are still cautious about Europe’s prospects.
Gold saw the biggest fall in sentiment this month by -7.17%. However sentiment towards the asset class overall remains extremely high at 40.37% as investors continue to seek refuge in this safe haven. Year-on-year cash was the asset class that saw the biggest fall in sentiment, down -11.74% to -30.83%.
Looking across the last year, Eurozone shares (up 24.27%), Emerging Market shares (up 14.49%) and Japanese equities (up 12.59%), have seen the biggest increases in popularity.
The performance of asset classes over the last month shows positive change with all but two asset classes (UK property and commodities) improving their performance this month. In June, it was Eurozone shares that performed the best at 4.6%, followed by Emerging Market shares at 3.9%. Commodities meanwhile was the biggest faller to -1.5%. Year-on-year it was a positive story as well with every asset class apart from commodities (down -7.2%) and UK Property (down -2.4%) improving their performance since this time last year. UK shares improved the most since this time last year at 19.5%, followed by Eurozone shares at 19.2% and US shares at 15%.
Markus Stadlmann, Chief Investment Officer at Lloyds Private Banking, says:
“Although our index takes a global perspective, the more interesting angles this month are playing out closest to home. If we look at UK equities, investors are unconcerned about shifting political tides and slowing business activity growth. Sentiment is more than double what it was this time last year.
“Meanwhile across the Channel, Eurozone shares are steadily emerging from a prolonged spell of intense unpopularity. Investors will have taken comfort from some of Europe’s geopolitical uncertainties easing off since the start of the year. That said, we are seeing some big regional differences emerging – Spain’s economic recovery is impressive, while Italy’s ongoing structural banking crisis is worrying.
“A general observation to make in parallel with this month’s data, is that there is strong momentum building around the euro. Speculative positions are net positive for the euro for first time in three years.”