UK Stock Market Becomes Most Preferred in Europe
The British stock market has emerged as the most favored among European markets, according to a regional survey conducted by Bank of America, as reported by Bloomberg.
The proportion of investors indicating a preference for British stocks over the next 12 months has surged to over 30%, compared to less than 10% in July, the survey reveals. Participants also favored the Swiss stock market over those in Italy, France, and Spain. In contrast, Germany has become the least preferred market, with over 30% of respondents expressing reservations about investing in the country.
Shift Towards the UK Amid Economic Concerns
This shift towards the UK is reinforced by data from last month and occurs amidst recession fears that are shaking financial markets. Companies listed on the London FTSE 100 index are viewed as solid bets during periods of volatility due to their so-called defensive nature.
The FTSE 100 index, which comprises large-cap companies, has remained nearly unchanged over the past month, while the pan-European Stoxx 600 index and the S&P 500 in the US have declined by more than 4%.
Significant Turnaround from Previous Sentiment
This marks a significant turnaround from 18 months ago when British stocks were among the least favored globally, according to the same BofA survey. This negative sentiment coincided with the UK grappling with high inflation, an energy crisis, and sharp sell-offs of British assets triggered by unfunded tax cuts proposed by former Prime Minister Liz Truss.
Investor Confidence in UK Politics Grows
Investor confidence has strengthened regarding political stability in the UK following the Labour Party’s centrist victory in the July elections under Keir Starmer. Recent data also indicated an unexpected drop in unemployment in the UK, signaling strength in the economy.
Meanwhile, France continues to grapple with a political crisis, and data released today showed that investor confidence in the German economy has dwindled to its lowest level since January following disappointing results.
The BofA survey was conducted between August 2 and 8 among 122 participants with assets totaling $265 billion.
