Investor sentiment towards UK equities dropped back again in September after its brief rebound in August, falling to its lowest level in 18 months.
The latest Lloyds Private Bank Investor Sentiment Index shows UK equities were the biggest loser, with net sentiment falling to 1.55 per cent, while confidence in UK equities, UK government bonds and UK corporate bonds also fell. Overall investors are now less bullish on the UK than they were following the general election or the Brexit vote.
Markus Stadlmann, chief investment officer at Lloyds Private Banking, says: “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.”
US equities were also less popular, down from 7.74 per cent to -2.17 per cent year on year as investors anticipate a market correction.
Stadlmann adds: “Away from home, we are keeping a close eye on events across the Atlantic. In our view, there are enough signs emerging to suggest that US growth expectations will be overshot. Furthermore, while we generally think bond markets are overvalued, we believe that the best relative value can be found in US treasuries.”
Eurozone equities saw a dramatic increase in popularity, with net sentiment up from 37.18 per cent last September to -5.78 per cent – the highest level since the index began.
Unsurprisingly gold was the winner, with net sentiment of 43.61 per cent, up from 41.26 per cent this time last year.