Investor confidence in UK stocks falls

• Confidence has decreased in the UK (down 11%), European (down 4%) and Japanese stock markets (down 10%), according to the HL Investor Confidence Index.
• Confidence in UK Economic Growth has also decreased by 13 points, a drop of 23%.
• Confidence has increased in Asia Pacific (up 8%), Global Emerging (up 7%) and North American (up 5%) equities.
• Trades reflect this US bias, making up more than half the most bought funds by HL clients.
• This month’s survey was open between 1 – 8 November.
  

Emma Wall, head of platform investments, Hargreaves Lansdown:

“November started with a bang – two interest rate cuts flanking the Pond and a new President headed for the White House. Markets reacted positively, or at least stock markets did. This was, in part, down to the nature of the result – either candidate winning with a clear majority would probably have resulted in a bounce, markets after all do not like uncertainty. There is also an expectation that Trump’s policies may be good for domestic equities longer term, thanks to measures that could stimulate growth and the potential for a more relaxed regulatory regime for sectors such as tech and banking. The bond market took a different stance, however, over the election period, with prices falling and yields on both sides of the Pond rising on the news. That suggests bond traders think Trump’s policies are likely to be inflationary and expensive, without much mind of how large the deficit gets, pushing rates higher for longer.

HL clients have long favoured US equities over others if you examine the trades on platform. Over the past five years, the most bought table has been dominated by S&P 500 trackers, actively managed global funds with a serious US bias and tech funds, both active and passive. Over the summer, the Labour victory in the UK General Election did see a confidence in domestic equities tick up – helped also by the positive performance of the FTSE 100 in the first half of the year, hitting a record high of 8,446 in May. But more recently domestic equities have struggled, a UK Budget deemed by the market as potentially inflationary, and a market Trump bump post US election, have proved headwinds.

And HL clients have spoken – confidence in UK equities has decreased 11% month on month, with conviction in European stocks (down 4%) and Japanese stocks (down 10%) also falling. Confidence in UK economic growth has also decreased by 13 points, a drop of 23% pre and post Budget. Instead, investors are more confident in Asia Pacific (up 8%), Global Emerging (up 7%) and North American (up 5%) equities. This is reflected in trades too, with more than half the most bought funds either direct US equities or tech funds with underlying US companies. Investors in closed-end funds, or investment trusts, showed a more pragmatic and diversified approach – alongside investments in US equities, trust investors snapped up renewable energy trusts and those with an income focus, including ‘AIC Dividend Hero’ City of London. This trust has increased its dividend for 58 years in a row, and was one of the ‘5 to Watch’ trusts that HL fund analysts picked for 2024.”

Investor Confidence in global markets

 HL data

Investor Confidence Index

The Investor Confidence Index is compiled by surveying HL clients on a monthly basis. Each month we send the investors’ confidence survey to 6,000 random clients and there is a representative split of our clients by age. On average around 10% of clients respond