Investor confidence improves in August after post-Brexit slump, survey reveals

The Hargreaves Lansdown Investor Confidence Index came in at 80 in August, rising 19% since July’s reading when investor confidence was hit following the UK’s vote to leave the European Union on 24 June.

However, the August reading is still below the pre-Brexit level of 92 and lower than the long-term average of 101.

“Investors are now more positive about the prospects for the stock market than they were in the immediate aftermath of the referendum, though there is still a Brexit-shaped dent in confidence,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.

“The sharp fall and subsequent recovery in confidence underlines how volatile sentiment has been in the last few months, and why it’s a particularly inappropriate time to be hanging too much significance on one or two data points.”

On a regional basis, the confidence index on UK shares rose to 59.8% in August from 52.3% in July. A score above 50% represents positive sentiment.

In Europe, the confidence score improved to 47.3% from 43.3%, although the reading remained negative.

Investor sentiment was highest in the US with a confidence score of 62.8% in August, up from 62.0% in July.

“The UK stock market is still trading near its long term historical average, and looks attractive when compared to government bonds, some of which have traded at negative yields in recent days, offering investors the dubious privilege of actually paying for the privilege of lending money to the UK government,” Khalaf said.

“Investors remain most confident in the US stock market despite relatively high valuations, which is understandable seeing as economic growth and monetary policy appear to be going in different directions on either side of the Atlantic.”