Investors in Europe are less optimistic than they were in the autumn of last year, with rising interest rates and inflation among the biggest concerns, according to the latest UBS Investor Sentiment survey.
The decline in optimism is, however, from a relatively high base.
The survey by UBS showed that in Europe, excluding Switzerland, investor optimism has fallen nearly 10 percentage points since the previous survey in the third quarter of last year, with 68% of European investors feeling optimistic about the region’s economy in the short-term.
Short-term optimism in stocks has also fallen, with 43% planning to invest more in the next six months.
Switzerland bucked the wider European trend. Swiss investor optimism is up from last quarter, with 68% feeling optimistic about their economy in the short-term, a 12 percentage points increase from the previous survey.
Among Swiss investors, 68% are optimistic about Swiss stocks, up from 46%. However, investors remain cautious in the near term, with only three in 10 planning to invest more in the next six months.
The latest survey polled 3,000 investors and 1,200 business owners across 15 markets globally, in January. The previous survey was conducted in September and October of 2021.
The rising prices of energy, gasoline and other goods have investors worried, according to the survey findings. Many investors believe elevated inflation will last more than 12 months.
While economic optimism has waned slightly, the majority of investors worldwide remain confident in the stock market over the next six months, with many seeing an opportunity to borrow and make portfolio changes.
Two-thirds of investors hold more than 10% of their portfolio in cash and, of those, nearly half say they are “waiting for the right opportunity” to invest.
If they do choose to invest, six out of 10 investors see technology (63%) and healthcare (59%) as very attractive sectors.
“With the effects of Covid-19 expected to impact the healthcare industry for years to come and a shift to a more digitalised world, investors see further opportunities in these sectors,” said Iqbal Khan, president of UBS Europe, Middle East, and Africa and co-president of UBS Global Wealth Management.
“However, given high levels of inflation and interest rate hikes on the horizon, investors are waiting for the right moment to put their money to work.”
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