China fears replace inflation as biggest growth factor

Bank of EnglandFewer UK intermediaries fear inflation and they have now turned more favourable towards the UK's economic outlook, evidence suggests.

Just one in five of 78 intermediaries, who were also investment professionals, cited the risk of inflation as the biggest threat to investment growth globally, says Barings Asset Management.

In percentage terms this is 21% compared to the 32% who cited inflation as one of the biggest threats in the last Barings Investment Barometer, which covered 108 professionals.

Nevertheless, 53% of intermediaries are anticipating the UK economy to “predominantly experience inflation”, says Barings. This compares to 58% when questioned previously. 

Intermediaries have become slightly more positive towards UK equities with 87% saying they were “favourable” or “very favourable” towards the asset class, contrasting with 86% in the last survey.

When the respondents were asked what they believed were the biggest macro-economic challenges to investment growth in the next six months, nearly half (47%) cited slowing growth in China. This was a significant increase from one in five (21%) intermediaries that selected this option in the previous Barometer. As a result favourability towards Asia equities (excluding Japan) fell from 97% to 84%.

The latest survey was carried out between May 16 and June 13, while the previous research happened February 15 to March 14.

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