Interest in owning UK assets has jumped when measured by a ‘Brexometer’ index that tracks investor sentiment towards the UK.
The number of institutional investors looking to increase their holdings of UK assets rose to a “record” high of 21% in the third quarter of this year, according to State Street, which runs the Brexometer Index. This is an 8% increase from 13% in the previous quarterly survey.
Michael Metcalfe, head of global macro strategy at State Street Global Markets, said investor sentiment toward UK assets was becoming increasingly bifurcated as the Brexit deadline loomed.
“On balance, the optimists, those planning to increase their holdings, are still winning the day – just,” he said.
However, Bank of England data released at the end of August showing the largest drop in foreign holdings of gilts since records began in 1982, means this may not be the case across all investor types, Metcalfe added.
“The story of Brexit so far is that fears of economic disruption and capital flight have been unfounded and investors have been willing to give the UK the benefit the doubt. But the closer we get to the key Brexit deadlines without signs that a deal can be reached, the more likely it is these fears will become a reality that investors will need to adjust too,” said Metcalfe.
State Street obtained the views of 101 professional investors between July 27 and August 20.
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