Euro and UK sentiment record high Barings

Sentiment towards European and UK equities is at a record high according to Barings research.

Euro and UK sentiment record high Barings

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European equities saw 91% call in their favour as ‘very’ or ‘quite’ favourable towards the asset class, an improvement on last year when 79% felt the same.

UK equities were preferred slightly, with 93% favouring the asset class, compared with 79% a year ago.

The intermediary views were shared by Barings, with head of wholesale distribution Rod Aldridge expecting the UK to be one of the strongest economies this year, approaching 3% growth.

The number of intermediaries responding they felt ‘very’ favourable towards European equities was 39%, up from 18% a year ago and just 4% two years ago. The corresponding UK figures were 40%, up from 29% and 13% respectively.

In the first quarter of 2013, Barings revealed that 71% of respondents felt eurozone growth was the biggest macroeconomic challenge globally. This has now fallen to just under half, or 47%.

New challenges

The biggest challenge faced by advisers now was seen the inability of overleveraged economies to reduce debt, following by a slowdown in China, cited by 35% of respondents – 55% a year ago.

Aldridge said: “The overarching sentiment from intermediaries towards Europe and the UK is clearly strong.  In Europe, Barings expects to see continued support for asset prices in 2014 and equities to outperform bonds as the economic recovery continues.”

Higher than last year, Barings found 85% of respondents said clients were still concerned about the effect inflation was having on their investments, and 78% of intermediaries expected this would be a continued problem, with inflation set to rise for the next three years.

“While sentiment has turned strongly positive for both Europe and the UK, it is important for investors to bear in mind that uncertainties remain.  The next 12 months will be very important with regards to a pan-European recovery, particularly for economies such as France and Italy.  In this environment, we believe that investors need to actively manage opportunities and risks and take a long-term view,” Aldridge concluded.

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