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Investor sentiment for UK asset classes hits new low

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
18/05/2015

Investor sentiment towards UK asset classes has dropped to its lowest level since November last year, according to the Lloyds Bank Investor Sentiment Index.

Eight out of ten asset classes recorded a drop in investor sentiment in May, with UK shares seeing the biggest decline, falling 11 percentage points from last month to 26 per cent.

UK government bonds saw the second biggest decline in sentiment among UK assets, to 12 per cent.

International shares, on the other hand, remained strong in terms of consumer confidence – eurozone shares and Japanese shares both reported increases.

Eurozone shares recorded the largest improvement for the third consecutive month, rising by 5 per cent – although overall sentiment still remains negative, at 23 per cent.

Despite large declines, net sentiment remains strongest for UK property at 47 per cent. The table below details asset class sentiment over the past year.

YMoney.SentimentTable.18.5.15

In contrast to waning sentiment for eight asset classes, market performance, in terms of returns earned, increased for four of the ten asset classes. The table below details asset class performance over the past year.

YMoney.AssetClass.Table.18.5.15

Commodities saw the largest monthly increase in returns of 8 per cent, a significant shift for the asset class, which could have been helped by the recent rise of crude oil prices. This was followed by Japanese shares and emerging market shares both sitting at 1 per cent.

“The results paint an interesting picture of UK asset classes,” said Ashish Misra of Lloyds Bank Private Banking.

“Having recorded their worst performance since November 2014 across all asset classes, the results show investor unease due to potential economic and post- election uncertainty in the UK in May.

“However, eurozone shares and Japanese shares have displayed positive performances and have gained from the halo effect arising around the outcome of elections in the UK. With continued significant improvement in net sentiment scores for eurozone shares, the asset class could be the one to watch out for with a potential to extend and sustain the current upward trend in the coming months, unless it hits an unexpected stumbling block.”


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