UK shares and property worst hit as investor confidence plummets after Brexit vote
Investor confidence has suffered a “substantial drop” since the EU referendum, a new report has found.
Lloyds Bank said its investor sentiment index, launched in March 2013, has fallen to its lowest ever level, turning negative for the first time.
It found investor confidence is increasingly negative in relation to asset classes exposed to the UK.
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UK equities and property were hit with falls of 21.75 and 35.36 percentage points respectively. Sentiment in relation to UK gilts, meanwhile, fell more than 15 per cent.
Lloyds said there had also been a slight fall in sentiment towards cash amid speculation that the Bank of England may change interest rates next month.
The report said a “continuing flight to safe havens has helped maintain and further the allure of gold”, which experienced a positive swing of 16 percentage points.
Commodities, emerging markets and Japanese equities also performed well.
| Sentiment in July 2016 | Percentage point change on June 2016 | Percentage point change on July 2015 | |
| UK shares | -15.29% | -21.75% | -41.83% |
| Eurozone shares | -48.27% | -12.07% | -0.20% |
| US shares | 3.39% | -2.16% | -10.06% |
| Japanese shares | -1.10% | 4.69% | -0.30% |
| Emerging market shares | 7.29% | 2.79% | -2.44% |
| UK government bonds | -15.96% | -15.58% | -34.60% |
| UK corporate bonds | -13.83% | -13.93% | -26.32% |
| UK property | -5.76% | -35.26% | -52.91% |
| Gold | 53.58% | 16.02% | 17.96% |
| Commodities | 5.55% | 1.10% | -4.34% |
| Cash | -21.90% | -2.81% | N/A |
| Average (excluding cash) | -3.04% | -7.62% | -15.50% |
“We have seen strongly declining sentiment from investors in the aftermath of the referendum. Initial reactions were clearly very negative to UK assets, although we did see some investors coming back to the table to buy back into UK shares following the initial sell-off,” said Markus Stadlmann, chief investment officer at Lloyds Private Banking.
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“We would expect investor sentiment to continue to be susceptible to sharp, short-term shifts as investors absorb the news flow over the next two to three months.”
He added: “One area where sentiment and market performance have moved in tandem is commercial property, and this is an asset class where we remain extremely vigilant, particularly around issues such as liquidity. Our client portfolios remained resilient over this period, as we had moved away from credit risk and built US positions relative to European exposure.”