Investor confidence has risen for the third consecutive month to reach a nine-year high, according to Hargreaves Lansdown’s Investor Confidence survey.
Some 82 per cent of investors think that the UK stock market will be higher in 12 months’ time, although confidence in the US appears to be deteriorating.
The Hargreaves Lansdown monthly survey shows investor confidence rose in October to 124, from 119 in September.
In October 63 per cent of investors thought the prospects for the US were positive over the next 12 months. This has fallen from a peak of 80 per cent in June.
Japan has the lowest prospects amongst investors of any region over the next 12 months. Only 45 per cent view the region positively.
Investor confidence in Asian and emerging markets shares remains low but is improving. Fifty six per cent of investors viewed global emerging markets positively, whilst the number was 60 per cent for Asian shares. These are up from 13 per cent and 15 per cent respectively in June when investors retreated from the region following Ben Bernanke’s comments suggesting the US will begin to taper QE.
Confidence in the UK rose in October and the UK is now the most popular sector amongst investors. According to research from Hargreaves Lansdown, 74 per cent of investors thought the UK stock market would be higher in six months’ time, up from 63 per cent in September.
Longer-term investors continue to believe the UK stock market would be higher – 82 per cent think the UK stock market would be higher over 12 months. Over three years the figure drops slightly with 79 per cent of investors believing the stock market will be higher.
The survey was conducted before the European Central Bank announced their interest rate will be cut from 0.5 per cent to 0.25 per cent. In the UK expectations for interest rates to rise in the next 12 months have been creeping up since Mark Carney announced his forward guidance in August, then 22 per cent of investors thought rates would be higher in 12 months’ time, now 43 per cent expect them to be. Over three years 95 per cent believe rates will be higher.
Adrian Lowcock, senior investment manager at Hargreaves Lansdown, says: “Confidence amongst investors has recovered following a dip in August and is now at a nine-year peak. At the same time the FTSE 100 has been trading close to its all-time high, reached on 31 December 1999.
“Whilst confidence is growing, investors have changed their outlook for the different regions. The UK has benefited the most, with investor confidence growing as the economic outlook has been improving. In August the Bank of England upgraded the UK’s growth forecasts, with the IMF following suit in October.
“The decision by the US not to taper Quantitative Easing in August resulted in the sell-off of emerging markets being reversed and investors are now beginning to look at the region again, although confidence is growing from a low level.
“Japanese and European markets have long been unpopular with investors but, according to our analysis, are also amongst the cheapest markets. Both had a great start to 2013 although Japanese equities have drifted off as the initial excitement over Shinzo Abe’s election waned. However the stock markets of both regions continue to look attractive for long term investors.”
The Hargreaves Lansdown Investor Confidence Index has been running since May 1995 and reached a peak of 127 in July 1999 and a low of 61 in May 2012.