UBS’ Investor Sentiment survey has found that UK investors are the most bearish in Europe, thanks to Brexit uncertainty, but the bank is advising clients against abandoning their sterling-denominated assets for the time being.
“As we get closer to the UK’s official departure from the EU at the end of March, political turbulence is dragging on investor sentiment in the UK compared to the rest of the region,” Nick Tucker, UBS Wealth Management’s head of UK Domestic says. “UK investors seem to have dramatically lowered expectations for 2019 in almost every sense, from expected financial returns to their outlook for the economy.”
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“From our conversations with clients up and down the country, we know that investors are anxious. Nevertheless, UBS’s long-standing advice is to maintain exposure to sterling-denominated assets at benchmark levels until more clarity emerges.”
UBS survey highlights Brexit uncertainty
UBS’ survey, conducted between 16th November and 7th December last year, found that 55% of UK investors are worried about the domestic political environment, compared to 43% among EMEA investors. Only investors in Italy similar levels of concern, with 53%.
Tucker says: “Local factors are no doubt impacting confidence in other markets, such as Italy. However, when compared to EMEA, the UK sentiment certainly seems to be the hardest hit.
“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.”
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By GlobalDataThe terms of Britain’s departure from the European Union remain a mystery at present, with prime minister Theresa May recently offering parliament votes on a ‘No Deal’ and the possibility of delaying Article 50 should her deal be defeated in the Commons again.
The pound surged to a 21-month high against the euro after May’s pledge, helped on its way by the strong possibility that a No Deal would now be taken off the table by MPs.
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