Investor confidence in UK firms slides

According to the latest investor sentiment index from the banking giant, shares in UK-listed companies saw the biggest drop in confidence of all asset classes in April, falling to 9.1 per cent from 23.5 per cent back in March.

This decline in popularity coincides with the triggering of Article 50, which Lloyds said could have caused investors to become more cautious towards UK equities while they wait to see how the political and financial market reactions play out.

However, the fall in confidence was not reflected in actual performance which saw UK equities improve by 0.9 per cent for the month, and 17 per cent for the year.

While British investor confidence across all sectors dipped again in April, falling to 4.3 per cent, sentiment is still significantly higher than it was this time last year, when it was -0.24 per cent.

According to Lloyds, this could suggest that investors remain relatively upbeat, especially when looking at opportunities around the world. 

While confidence in the UK saw the biggest drop of all regions, Markus Stadlmann, chief investment officer at Lloyds Private Bank said he was still “fairly positive” about the overall health of the UK economy this year.

“In light of Theresa May’s decision to seek a general election, the volatility of UK equities and bonds could be elevated over the short-term.”  

Investor sentiment towards European equities was still in negative territory, but rose to -22.1 per cent from -34.4 per cent, which is an indication that investors are increasingly less concerned by Europe’s own geopolitical uncertainty. 

According to Lloyds, the only asset class to see a year-on-year fall in performance was UK property which is down 2.7 per cent.

Mr Stadlmann said: “The outlook for global earnings is relatively bright and it is also clear investors are looking further afield for opportunities due to the uncertainty facing the UK.”  

katherine.denham@ft.com