Investor sentiment has fallen to its second lowest level since July 2013, according to figures released this morning.
The Lloyds Bank Private Banking investor sentiment index, compiled from survey data, dropped to a score of 4.55 per cent this month. It was the lowest since September last year when a big rout in Chinese stocks sent shockwaves through global financial markets.
“Investors are feeling particularly gloomy at the moment, with asset class performance dropping off as we start 2016,” said Markus Stadlmann, chief investment officer at Lloyds Bank Private Banking.
Optimism on shares in the UK, Eurozone, US, Japan and in emerging markets all declined from December to January. Investor sentiment on UK corporate and government bonds – a type of loan – also fell, with only UK property and gold rising.
Over the past month the actual market performance of all ten asset classes included in the survey dropped. Financial markets have been rocked by stock market falls in China. Concerns over slowing growth in the country has also hit commodity prices, with demand for many industrial commodities imported by China expected to fall.
“Given declining market performance and falling levels of sentiment, it is surprising to see sentiment towards bonds also falling. But, by sticking to familiar investments like property and gold; some investors might be missing the potential opportunity offered by lower risk fixed income assets such as bonds,” Stadlmann said.
In the last 12 months, the only asset classes covered by the survey toward which investor sentiment has risen has been UK property and Eurozone shares. The rise in optimism on UK property may be the result of ever-increasing house price growth, while Eurozone shares could have been lifted by the European Central Bank’s asset purchase programme, designed to inject cash into its economy.