Hargreaves Lansdown Group  

Investor confidence bounces back

Investor confidence bounces back

This month has seen a resurgence in confidence among UK retail investors, in spite of the looming Parliamentary vote on the Brexit deal. 

The HL Investor Confidence Index has recovered from December’s record low of 52 points to 67 points in January. 

The index measures the confidence of retail investors in the UK stock market over the periods of six months, one year, and three years.

It had observed strong fluctuation in investor outlook in the last three months of 2018, as it jumped from a low of 53 points in October to 69 points in November and back down to 52 points last month. 

When considered on a 10-year average the index currently stands at 91 points.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "The new year has brought with it a resurgence in UK investor confidence, though we wouldn’t be surprised to see it take a knock again as the Brexit showdown looms in Parliament. 

"Overall sentiment is still weak by historical standards, and has swung wildly in recent months, and that’s likely to remain the state of play until we see some light at the end of the Brexit tunnel."

Investor confidence fell across all markets in January with the exception of the UK and Europe. 

In addition to Brexit, investor concerns included the US-China trade war and negative news from the UK high street.

Mr Khalaf added: "Markets and political uncertainty don’t make good bedfellows, and so this is an uncomfortable time for investors.

"In such circumstances it’s a good idea to remember the basics of investing. That means keeping diversified, focusing on long term goals, and avoiding attempts to time the market as you may miss key days when stock prices rise sharply."

Similarly Andy Parsons, head of investments & product proposition at The Share Centre, said: "As investors we need to take a step back and consider why we’re investing.

"If the investment goal, and time frame associated hasn’t changed, firmly remaining in the future then you should sit tight.

"It’s very easy to get swept along with a tide of emotion as markets react, but a cool and logical approach will serve you better."

He added: "Remember, on Friday June, 24 2016, the morning of the Brexit result, the UK stock market was down around 8 per cent - creating significant volatility, however by late afternoon the leading UK markets had started to stabilise and recovered ground to be only down around just over 3 per cent."   

Jenny Turton is a freelance reporter for FTAdviser