UK investor sentiment fell 4.2%in July with UK Shares (-7.2%) and UK Property (-6.4%) being worst hit according to Lloyds Bank Private Banking.
The Lloyds Bank Investor Sentiment Index said worldwide political and trade tensions had taken a toll on investor sentiment.
Lloyds Bank Private Banking said UK-based assets may well be suffering from the so-called ‘Brexit effect’ with continuing uncertainty since the referendum in June 2016 leaving investors skittish.
July’s gilt performance remains unchanged year on year (0.0%), however investor positivity during the same period increased (+7.3%).
This could reflect investor anticipation of a flight to high quality fixed income, caused by continued Brexit uncertainty.
In the build-up to the Brexit vote, the bank noted sentiment towards gilts fell consistently, dropping from 16.0% (Nov 2015) to -0.4% (Jun 2016), an average of 2.4% per month, reflecting investor nervousness in the lead up to the referendum.
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The asset class subsequently fell immediately after the vote (-16.0%) and sentiment recovery for gilts has been stagnant (-2.5% July 2018).
Lloyds Bank Private Banking said this month sentiment on property dipped once more (-6.4%) and failed to make any gains over the previous year (-0.2% year on year). Prior to the Brexit vote, property was incredibly popular with sentiment regularly sitting around the 50% level (47.2% in July 2015).
In the aftermath of the referendum, property sentiment fell by a significant 35.3%, hitting a record low in half a decade (-5.8%). Property’s asset performance also lost 10.3% in a single month. Today investor sentiment remains subdued (14%), but values have improved 6.7% since last year.
Markus Stadlmann, chief investment officer at Lloyds Bank Private Banking said: “While hunting for undervalued stocks has provided some support for inflows to emerging markets in recent days, trade issues are hitting emerging markets through both new tariffs and risk-off sentiment.
And, closer to home, there is Brexit. The Government’s White Paper is already a subject of great debate, coming under heavy scrutiny and they’re yet to agree how their final relationship with Brussels will work.”