Reuters / Eddie Keogh
LONDON — Nearly half of UK investors believe that Brexit will have a positive impact on investment, but they are concerned by the leadership of Theresa May and Donald Trump, according to a new poll by investment firm IW Capital.
A survey of 1,000 UK-based investors found that 44% believe the Brexit vote will have a positive impact on their investment strategies in 2017, despite widespread speculation that it would be destructive for the sector.
They cited the fact that the uncertain political climate has created "greater risk appetite," which means they are seeking new investment classes with potentially higher yields.
There were significant fears from British investors about the impact of Brexit-related instability before the June vote, with £65 billion taken out and converted into other currencies in the months previously — but the survey is the latest in a line of increasingly optimistic assessments of Britain's post-Brexit economy.
Financial lobby group TheCityUK last week performed a "dramatic U-turn" to herald Brexit as a "once-in-a-generation" opportunity, while the Bank of England's economic growth forecasts have been revised upwards and Bank of America Merrill Lynch is reportedly planning to keep its European headquarters in London.
Investors responding to the survey — who held between £10,000 and over £250,000 worth of investments — were significantly less positive about the leadership of May and Trump. Just 27% of those surveyed said they have faith in Theresa May’s capability to promote investment value as part of a post-Brexit government, and 44% are worried about the impact of Donald Trump’s presidency on their investments.
May announced in January that Britain would pursue a "hard" Brexit by leaving the EU's single market, a move that has likely been received badly by investors advocating a close trading relationship with European partners.
However, only one in 10 investors felt that the shock political events of 2016 — particularly the UK's vote to leave the EU, and Donald Trump's election to the US presidency — would influence their investment decisions this year more than any other factor.
A bigger concern for investors is record-low interest rates. Bank of England governor Mark Carney cut interest rates to 0.25% last year, and held them at that level last week, and the move has troubled investors.
In total, 36% said that low interest rates will negatively impact their investment strategy this year, and 26% of investors said it was the single biggest risk to their investment strategy, given the role of low interest rates in driving inflation, which can in turn reduce the value of investment returns.
Luke Davis, chief executive of IW Capital, said: "In a year of firsts, where sizeable political shifts made a notable impression across many financial markets, investor sentiment within the private sector has remained resilient.
He added: "It’s interesting to note investors’ plans in light of the slump in interest rates and leadership discontent. With investors looking to new investment classes as we enter into 2017, there is clearly a huge amount of confidence towards the country’s entrepreneurial capabilities."
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