Investor confidence in UK shares hits record high – Lloyds Banking Group

After a strong year for UK shares, the Lloyds Bank Private Banking Investor Sentiment Index survey shows private investor confidence in asset class is at its highest since the survey began in March 2013.

According to the monthly survey, the net sentiment among surveyed investors has risen to +38 at the start of January, with over 47% of respondents holding a positive view just 9% holding a negative view, while 31% held a neutral view. This is in sharp contrast to March 2013, when the figure was just over +16, with nearly 34 per cent holding a positive view and over 17% negative, while 38% held a neutral view.

The year 2013 saw a number of positive news stories about the UK economy including improved economic indicators and company earnings. Lloyds Bank Private Banking currently holds a positive view towards UK equities, with an overweight position in its client portfolios towards the asset class.

In other global markets, private investors looked beyond market concerns towards US equities following the first round of the government’s reduction in quantitative easing. Net sentiment improved towards the US stock market between December and January rising nearly seven points to +7.

Investors surveyed also remain broadly negative towards Eurozone stock markets, with sentiment staying firmly in negative figures at -21. However, this is a substantial improvement on lows of -59 in April 2013. Japanese shares also reached their highest net sentiment in the survey’s history, climbing almost five points from the previous month to +13 in January 2014. Lloyds Bank Private Banking maintains a neutral stance towards US equities, but sees value in the Eurozone and Japan, holding an equity overweight position in both these markets.

Commenting on the latest Investor Sentiment Index, Ashish Misra, head of Investment Policy at Lloyds Bank Private Banking said: “It’s encouraging to see investors placing more faith in the UK stock market, and good news for British companies ahead of the first earnings season of 2014. There has been a slew of positive economic data out of the UK throughout 2013, suggesting that the recovery is gaining momentum, and it’s likely that investors’ views towards the UK stock market are reflective of this.

“The increase in sentiment towards US equities was perhaps surprising given the QE taper that began just before Christmas, although US equities outperformed every other global equity market except Japan in 2013. We remain neutral towards the US and see the best opportunities for equity investors currently in the UK, Japan and the Eurozone.”

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