The start of December has seen a marked improvement in overall asset class performance ahead of the New Year, according to the monthly Lloyds Bank Private Banking Investor Sentiment Index.
Net sentiment for just four of the ten asset classes surveyed show a negative monthly score. This compares to last month where nine asset classes recorded a negative monthly score.
December also reversed the percentage point decrease from -7% seen last month as the overall average sentiment score of those surveyed across all asset classes increased. This is the only the third positive change in average sentiment scores in the past seven months.
The Eurozone shares asset class displayed one of the largest positive month-on-month performance, with net sentiment increasing eight percentage points and providing a strong reflection in market conditions, following a generally positive third-quarter earnings announcement season for the region. However, the asset class still sits at a net negative balance of -37%.
The Japanese shares asset class was the biggest net loser in December, dropping 16 percentage points to -19%, significantly falling in investor confidence. This chimes with the recent GDP data, showing two successive quarters of negative growth.
Two out of four sterling-denominated asset classes recorded a positive performance with UK Shares rising seven percentage points to 27% and UK Property rising nine percentage points to 42%. The latter asset class has remained the top performing asset class through the course of the year, with changes in Stamp Duty regulations in the Autumn Statement expected to drive higher levels of activity in the asset class into 2015.
Gold has seen a small month-on-month negative swing in sentiment over the last four months, down five percentage points to 23%. The asset class has remained relatively stable through the course of a year in which bouts of investor anxiety led to periodic episodes of market turbulence. However, sentiment for Gold may moderate into the New Year with a strengthened economy and a stronger pro-risk investor sentiment, which could erode its perceived flight to safety status as this is at more of a premium when investors look towards safe haven options.
Ashish Misra from the Wealth Investment Office at Lloyds Bank Private Banking, says: “Despite what has seemed to be a turbulent 2014, December is a positive result for overall investor sentiment asset class performance. Japanese Shares has seen the biggest swing in sentiment over the course of the year, falling 27 percentage points year-on-year. However, with the falling price of commodities, Japan could really start to benefit from this price trend, Another one to watch out for is Eurozone Shares – with growing expectation of announcements signalling more policy intervention in 2015, which could potentially provide significant support to the asset class into next year.”