UK investors ‘increasingly optimistic’ about market prospects after key election

Retail investors are “increasingly optimistic” about the prospects for the UK and US markets once the upcoming election results have been decided, research from Charles Schwab UK seen exclusively by This is Money suggests.

The next general election in Britain is expected to be held sometime this year, and in the United States, the presidential election is scheduled for November 5.

UK investors are the most optimistic about the FTSE 100, with 44 per cent of respondents expecting its value to rise over the next year, compared to just 16 per cent who expect it to fall.

Sixty-six percent of UK retail investors expect UK markets to become more attractive after the general election.

For US markets, 62 per cent of UK retail investors expect US-based investments to be “even more attractive” after the US election in November.

Of the 1,000 investors surveyed, 45 percent expect Republicans to be the overall winners, compared to 40 percent who expect Democrats to win.

But, the research adds, those who expect Democrats to win the US elections are “a little more optimistic” about the market’s prospects afterwards.

Sixty-five percent of this group expect US assets to rise in value, compared to 62 percent of UK investors who expect a Republican victory to spur market growth.

More than four in 10, or 44 per cent, of UK retail investors surveyed said they were optimistic about the overall outlook for global markets next year. This marks an improvement from 35 percent last year.

Whats Next? Rishi Sunak is expected to announce a UK general election later this year.

Some 88 per cent of UK retail investors surveyed expect the value of UK shares to rise or stay the same over the next six months, while 87 per cent expect the value of US shares to rise or stay the same. stay the same.

According to the results, two out of three investors consider the UK and the US to be good areas to invest in this year.

But the reasons for investor optimism varied for each market.

The most common reasons why investors preferred UK assets are that they always invest in this market and consider it a “safe and less volatile opportunity.”

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The research adds: “The main reasons why investors consider the United States an attractive place to invest are that they believe it will offer the most attractive returns (48 percent) and they feel there is long-term value in this market (46 percent). percent). ).’

In terms of indices, while optimism around the FTSE 100 was stronger, 38 per cent of investors surveyed expect it to rise over the next year, while 13 per cent think it will fall.

More than half of investors surveyed said the value of their portfolios had increased in the past three months. This compares with 45 per cent of investors who said portfolios had improved over the same three-month period in last year’s Investment Forces research by the group.

Richard Flynn, UK managing director of Charles Schwab, said: ‘Our research shows a growing sense of optimism among UK retail investors.

‘The results reflect the belief among investors that market values ​​will improve once uncertainty around the upcoming elections has been resolved.

‘Most investors believe that both the UK and US markets will offer attractive opportunities this year.

‘However, there are different reasons why investors are optimistic about each market. The UK is seen as a less volatile market than other countries, while the US is perceived to have more long-term value.’

Post-election optimism: Investors are more supportive of the FTSE 100