A new survey indicates that retail traders are shying away from the º£½ÇÊÓƵ market following Chancellor Rachel Reeves' recent Budget.
The study by Graniteshares revealed that over a quarter of retail investors (26%) have reduced their stake in the º£½ÇÊÓƵ after the Budget announcement, as reported by .
Moreover, out of the 1,000 British retail investors surveyed last month, one in five stated they are likely to decrease their investment in º£½ÇÊÓƵ markets by 2025.
"Economic news in the º£½ÇÊÓƵ has been relatively downbeat over the past six months and last year’s Budget has been criticised by businesses," according to Catarina Donat Marques, head of European retail strategy at Graniteshares.
The October Budget introduced by Reeves incorporated new taxes amounting to £40bn, including an increase in capital gains tax, leading to a substantial decline in business confidence. The strength of the US dollar is another significant factor deterring retail investors from º£½ÇÊÓƵ stocks – 27% are being put off due to this reason.
Following speculation about the Budget since late September 2024, there's been a noticeable drop in the value of the pound from $1.34 to just $1.24 today.
In the long term, the sentiment among retail traders towards º£½ÇÊÓƵ markets remains bleak, with 61% expressing disappointment with the performance of º£½ÇÊÓƵ markets over the past three years and 24% admitting to diverting their investments elsewhere as a consequence.
In the previous year, the FTSE 100 saw a modest growth of only 5.7 per cent, in stark contrast to the S&P 500's impressive return of 23.3 per cent. This disparity, largely due to the dominance of the US-based 'Magnificent Seven', has prompted a significant number of º£½ÇÊÓƵ retail investors to turn their attention to American investments.
Indeed, approximately 23 per cent of º£½ÇÊÓƵ retail traders have reported a decrease in the proportion of their investment portfolio dedicated to British stocks and funds over the past three years.
However, despite this trend, a third of these investors estimate an increase in their º£½ÇÊÓƵ investments.
Furthermore, it appears that º£½ÇÊÓƵ retail investors remain primarily focused on their domestic markets, with one in five estimating that half or more of their portfolios are invested in º£½ÇÊÓƵ stocks and funds.
