Investor confidence sinks to new low post-Brexit
After two consecutive months of improved sentiment in May and June, the mood among investors is now at its lowest level since the research began in March 2013 and has turned negative for the first time.
Sentiment towards UK equities and UK property fell sharply into negative territory with declines of 21 and 35 percentage points respectively. Confidence in UK government bonds (gilts) also deteriorated, falling by more than 15 percentage points.
The flight to safe havens helped maintain the allure of gold, which saw the greatest positive swing of 16 percentage points.
Asset classes considered riskier and less familiar to investors such as commodities, emerging markets and Japanese equities, saw sentiment improve as investors looked further afield away from more UK-focused investments.
Markus Stadlmann, chief investment officer at Lloyds Private Banking, said: “We have seen strongly declining sentiment from investors in the aftermath of the referendum. Initial reactions were very negative to UK assets, although we did see some investors coming back to the table to buy back into UK shares following the initial sell-off.
“We would expect investor sentiment to continue to be susceptible to sharp, short-term shifts as investors absorb the news flow over the next 2-3 months.”
Despite the sell-off in the wake of Brexit, UK equities actually showed positive performance for the month ending 1 July.
UK gilts rose nearly 5% in this period, while UK corporate bonds rose 2.9%.
Gold was the strongest performer with a 10% increase.
The one area where sentiment and market performance moved in tandem was commercial property, which fell by over 10%.