7% fall in expectations for positive growth, finds ‘Brexometer’

BrexitFewer institutional investors expect positive global growth in the near-medium term, according to a regular survey that tests sentiment towards Brexit.

The decrease in confidence in the Q4 2017 State Street Quarterly Brexometer Index is only slight – a 7% fall compared with the result in Q1.

The index – compiled using the opinions of 100 investors from around the globe – shows that 40% of respondents now expect positive global economic growth in the near-medium term, or three to five years.

The survey also found a rise in the number of institutional investors who now believe Brexit will have an impact on their business operating models, rising from 72% in the third quarter to 82% now.

However, the percentage of respondents who believe asset owners will decrease their levels of investment risk over the next three to five years has fallen 9% to 27% from Q3.

Michael Metcalfe, head of global macro strategy at State Street Global Markets, said there remained “limited evidence” that financial markets or their participants were discounting a worst-case outcome.

“Our metrics suggest that the majority of investors still have no immediate plans to change their holdings of UK assets. This has not changed even though the Bank of England is expected to reverse its precautionary interest rate reduction this month and sterling’s undervaluation has halved over the quarter.”

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