More investors looking to cut U.K. assets as Brexit uncertainty persists

An increasing amount of investors are preparing to cut their exposure to British assets even as the view on global growth prospects has brightened, according to a survey.

Of 102 professional investors, 24% said they’re looking in the next six months to reduce U.K. holdings, according to State Street’s Brexometer Survey, a quarterly gauge of investor sentiment toward the economic impact of Brexit. That’s up from 18% in the fourth quarter of 2017.

There was a slight uptick in investors considering increasing U.K. holdings — to 12% from 10%, the survey released Thursday said.

The financial services company’s survey arrived after the second phase of negotiations surrounding Britain’s exit from the bloc began earlier this month. A raft of issues remain to be sorted out before the U.K. leaves in 2019, including terms of a transitional phase that would allow businesses to adapt to new regulations.

While the full impact of Brexit has yet to unfold, investors have grown more optimistic about the global economy, with nearly 55% of survey participants saying they hold a positive view on growth prospects over the next three to five years. That’s up from 40% questioned in the fourth-quarter survey of 100 respondents.

State Brexometer Survey

“While a rising tide is supposed to lift all boats, the weight of Brexit uncertainty is now suppressing, although not yet submerging, attitudes toward U.K. assets,” said Michael Metcalfe, head of global macro strategy at State Street Global Markets, in a statement.

State Street also found that 87% of institutional investors foresee Brexit having an impact on their business operating model, an increase from 82% in the previous quarter.

Respondents from around the world were questioned for the survey, conducted between Jan. 8 and Jan. 26.
Source: MarketWatch

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