Hargreaves Lansdown Group  

Investor sentiment rebounds despite Brexit

Investor sentiment rebounds despite Brexit

Retail investors in the UK are regaining their confidence, with sentiment reaching a 10-month high in March.

The HL Investor Confidence Index has hit 80 points this month, up from a record low of 52 in December and equal to its level of May 2018. It’s still below the 10-year average of 91, however.

The index measures the confidence of retail investors in the UK stock market over the next 6 months, 1-year and 3-year periods.

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It showed in spite of its steady increase to 67 in January and 73 In February, the UK is still lagging behind other major equity markets. 

According to the index, investor confidence has risen steadily in all markets except for Europe, in which it only rose by 1 point during the month. 

Investors are most confident in Global Emerging Markets, where sentiment rose to 111 points in March, from 103 in February, closely followed by Asia Pacific and Japan, which posted 108 and 105 points respectively.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "As we approach the height of Isa season, the mood of investors has improved dramatically. This is quite a surprising turn of events, seeing as Brexit remains unresolved and time is running out on efforts to reach some sort of agreement.

"Indeed, Brexit remains a key concern voiced by private investors in our survey, though it seems it’s no longer tainting sentiment towards the market to the extent it did at the back end of last year.

"While improving, sentiment towards UK equities is still weak by historical standards, and considerably below most major markets. Confidence in Europe remains weakest though, with the ECB recently downgrading economic growth forecasts and making dovish noises about monetary policy."

He added: "While trade tensions and Brexit continue to undermine global growth expectations, international stock markets look in the middle of their historic ranges, in fact a little below, with the exception of the US.

"Valuations therefore suggest it’s a reasonable time to invest, though those who are making last minute Isa contributions can always park their money as cash and drip feed it into funds and shares gradually, if they want a smoother ride."