Nearly 90 percent of British investors are looking away from the UK for their investments, with more than 20 percent not holding any UK stocks in their portfolio, Investing.com has revealed today in newly released data.
According to the survey of more than 1,000 UK investors, in excess of 75 percent see more potential in overseas investments over the coming year and 30 percent have decreased their holdings in UK-based equities during the past year.
Furthermore, 65 percent of UK investors said that they have increased their positions in foreign investments or cryptocurrencies following the 2016 Brexit referendum, a trend that is only continuing to unfold amid COVID-19, with 62 percent increasing foreign and digital currency investing since the start of the pandemic in 2020.
"It’s unsurprising to see UK investors shunning the domestic market for better returns elsewhere,” said Samuel Indyk, senior analyst at Investing.com. “The FTSE has consistently underperformed its counterparts in Europe since the Brexit vote and there’s no reason to suggest that won’t continue as the UK grapples with its new trading arrangements."
As to where UK investors are looking to invest their cash, the U.S. is where an overwhelming majority have hedged their bets. As many as 66% of UK investors own investments in the States, followed by Europe (14%), China (5%), Canada (3%) and India (2%). Furthermore, when asked which currency had the most potential over the coming year, the U.S. dollar was again a resounding winner, with 29% of investors backing the currency and 18% believing cryptocurrencies to be the next best alternative. The pound sterling (13%) was seen to have slightly more potential in 2022 than the Euro (11%), followed by the Chinese Yuan Renminbi (10%).
Since the start of 2020, a comparable number of investors blame Brexit (67 percent) and COVID-19 (76 percent) for the economic struggles, while the same exact proportion (57 percent) attribute rising employment gaps to Brexit and COVID-19, respectively. But from a forward-looking perspective, investors’ outlook is far more skewed, as 79 percent of investors who believe the economy will weaken in the coming year attributed their position to the continued implementation of Brexit, and only 40 percent cited the pandemic as an anticipated factor of future economic weakness. Among those who believe the UK economy will strengthen in the next year, 36 percent cited Brexit, and 81 percent said the economy will grow stronger because the pandemic will subside.
"A shortage of workers in lower-paid jobs is having an impact on UK supply chains, with petrol stations running out of fuel and some supermarket shelves remain empty,” Indyk continued. “It’s unfair to blame this entirely on Brexit but the UK appears to be suffering more from these issues than its European neighbours. And, despite COVID cases showing signs of picking up in recent weeks, there's no reason to think the government will be reverting back to lockdown restrictions to control the spread. Lockdowns were particularly damaging for economic growth and the impact of Brexit could be more damaging in the coming months."
Forty two percent of respondents disclosed that they voted to remain a member of the European Union in 2016, but 52 percent asserted that if the Brexit referendum were held again today, they would opt to stay in the EU. Among those who reported decreased support for Brexit, 77 percent attributed their stance to economic issues and 27 percent citing pandemic-related issues, while 22 percent noted their growing support for the EU and its policies. Among those who reported increased support for Brexit, 69 percent expressed growing satisfaction with the EU, 33 percent cited the pandemic, and 29 percent cited the economy.