Financial services firm State Street has launched an index to track institutional investor sentiment towards the UK’s impending departure from the European Union.
The first reading from the quarterly Brexometer index, based on a survey of institutional investors during the fourth quarter of 2016, found that 80 per cent of investors expect the UK’s exit from the EU will affect their operating models, a 4 per cent increase on the benchmark figure set in the third quarter.
Despite this, 63 per cent of investors expect to maintain their holdings in the UK in the coming six months, the company found.
“Our findings show that institutional investors expect Brexit to have an impact on a range of operational issues, and subsequently we have seen an increase in clients looking to address this,” said State Street chief executive for Europe, the Middle East and Africa Jeff Conway.
“Many appear well prepared for Brexit and are proactively putting strategies in place to mitigate any ensuing impact.”
Additionally, the number of investors who expect investment into the UK to fall in the next quarter declined from 52 per cent when benchmark readings were taken to 48 per cent for the fourth quarter.
State Street Global Markets head of global macro strategy Michael Metcalfe said the results showed that “markets seem to have mostly moved on” from the initial shock referendum result.
“Questions over timing of the UK’s ultimate split from the EU and the nature of their future relationship still linger and have the potential to weigh on both the economy and the pound,” he said.
“Nevertheless, thus far at least, the extremely gloomy pre-Brexit predictions for the UK economy and asset markets look well off the mark.”