Investors are feeling positive about home-grown stocks, according to the Lloyds Private Banking Investor Sentiment Index. The majority of investors predict further gains for UK companies, following a stock market rally in the second half of 2013. The FTSE 100 gained 14.4% over the course of the year, and with positive economic news widely expected to be on the way, many analysts and investors alike predict this bull run to continue.
Last year proved the most successful year for the blue-chip index since 2009 when it rose 18.7%, and the FTSE 250 index of small and mid-sized companies rose to an all-time high of 15,935 at the end of the year. Last year marked the second successive year that small and mid-cap stocks outperformed, proving the adage that smaller companies flourish during an economic recovery.
The best performing stock markets of 2013 were not UK indices however, but the US-domiciled S&P 500 and Japan’s Nikkei index. Investor sentiment remains positive towards American equities despite the announcement by the Federal Reserve’s exiting chairman Ben Bernanke that the central bank would tapering its quantitative easing programme. According the Lloyds Index, sentiment towards the US rose seven points.
One region that investors still do not feel comfortable with – despite making economic headway – is the Eurozone. European equities registered a sentiment of -21, although this is an improvement on April last year when the Index registered sentiment towards the beleaguered countries at -59.
Ashish Misra, of Lloyds Bank Private Banking said it was encouraging to see investors placing more faith in the UK stock market, and good news for British companies ahead of the first earnings season of 2014.
“There has been a slew of positive economic data out of the UK throughout 2013, suggesting that the recovery is gaining momentum, and it’s likely that investors’ views towards the UK stock market are reflective of this,” he said.
“The increase in sentiment towards US equities was perhaps surprising given the QE taper that began just before Christmas, although US equities outperformed every other global equity market except Japan in 2013. We remain neutral towards the US and see the best opportunities for equity investors currently in the UK, Japan and the Eurozone.”
In November, Hargreaves Lansdown’s Investor Confidence Survey revealed that investor sentiment was at a nine year high, fuelled by the FTSE 100 rally which brought the index close to its all-time high recorded before the dot com bubble burst in December 1999. The Survey peaked in July 1999 and recorded its lowest level in May 2012.
