The monthly Investor Confidence Index from execution-only platform Hargreaves Lansdown says confidence has recovered following a dip in August.

The Index found that the UK is now the most popular sector among investors, with 74% forecasting the UK stock market will be higher in six months’ time, up from 63% in September.

Adrian Lowcock of Hargreaves Lansdown said: “Whilst confidence is growing, investors have changed their outlook for the different regions. The UK has benefited the most, with investor confidence growing as the economic outlook has been improving. In August the Bank of England upgraded the UK’s growth forecasts, with the IMF [International Monetary Fund] following suit in October.

“The decision by the US not to taper quantitative easing in August resulted in the sell-off of emerging markets being reversed and investors are now beginning to look at the region again, although confidence is growing from a low level.”

Investor confidence in Asian and emerging markets shares are still subdued but is improving, the Index found. Some 56% of investors viewed Global Emerging Markets positively, while the number was 60% for Asian shares.

These are up from 13% and 15% respectively in June when investors retreated from the region following Ben Bernanke’s comments suggesting the US will begin to taper QE.

Investors showed the most caution over Japan’s prospects over the next 12 months. Only 45% viewed the region positively.

Lowcock added: “Japanese and European markets have long been unpopular with investors but, according to our analysis, are also amongst the cheapest markets. Both had a great start to 2013 although Japanese equities have drifted off as the initial excitement over Shinzo Abe’s election waned. However the stock markets of both regions continue to look attractive for long term investors.”

The survey was conducted before the European Central Bank announced its interest rate will be cut from 0.5% to 0.25%.

In the UK expectations for interest rates to rise in the next 12 months have been creeping up since Mark Carney announced his forward guidance in August. Back then 22% of investors thought rates would be higher in 12 months’ time, while now that figure has jumped to 43%.