Experienced Investor
Market chaos: investor confidence plummets to two-and-a-half-year low
After an extremely volatile start to the year for global markets, it’ll come as no surprise to hear investor confidence has taken a significant hit this month, falling to its lowest point in over two and a half years.
According to a monthly survey by Lloyds Private Bank, investor confidence hasn’t been this low since May 2013.
It’s easy to see why investors feel gloomy as the actual market performance of most asset classes has fallen again this month.
Sentiment towards UK equities is now at its lowest level since Lloyds started the survey in March 2013, dropping by over six percentage points in the past month to a level of 6.38%.
US equities experienced a similar dip in sentiment, falling by 6.59% during the month to -0.80%, their lowest level since November 2013.
Looking at the actual market performance of equities, UK, eurozone, US, Japanese and emerging market equities all saw their performance fall between 5.8% and 8.6% in the past month.
Markus Stadlmann, chief investment officer at Lloyds Bank Private Banking, said this is a time for “calm heads and careful research”.
“Now more than ever, identifying buying opportunities in the equity market requires a deep understanding of company valuations and how markets work,” he said.
“What’s more, both the understanding of risk, and the appetite for it have changed. It is notable that some investors seem to be adopting an increasingly negative attitude even towards lower risk assets, such as government bonds, which have seen performance improve in the last month. This shows the current levels of uncertainty among investors.”
Gold has been the stand-out performer when looking at actual market returns, and this has been reflected in investor sentiment rising by 8.57% over the month.
In 2016, gold has over-taken UK equities as the second-most favourable asset class behind UK property.
The other positive actual market performance change over the past month was in government bonds, which improved by 2.2%. However, investor sentiment has not reflected this, with confidence in government bonds dropping by 3.87% this month.
