UK investors less confident in stock market

More than a quarter of investors say they are now less confident about the stock market than they were before the war on Iraq started, research showed today.

Around 27% of people say they now feel less confident about investing in shares, with nearly half saying they are still concerned about the state of the economy, while 6% think going to war has increased the threat of global terrorism, according to the Association of Investment Trust Companies.

But 15% of those questioned said they were now more confident in the stock market’s prospects, while half said the end of the war had had no impact on their confidence.

More than a third of people who felt more confident said markets had traditionally gone up following conflicts, with 8% citing the recent “Baghdad Bounce” as evidence of this.

One in five investors also thought economic issues could now be addressed by the Government following the end of the war.

Only 3% of those questioned said the threat of the spread of Sars – severe acute respiratory syndrome – had dented their confidence.

Annabel Brodie-Smith, communications director of AITC, said: “The AITC’s research suggests that economic uncertainty has replaced concerns about Iraq for investors.

“Nearly half of those who are less confident about investing at the moment blamed economic uncertainty and over a quarter are concerned about the threat of global terrorism.

“However, it is not all doom and gloom, there are signs of investor confidence beginning to pick up, with 15% of investors becoming more confident about investing now the Iraq war is over.”

Meanwhile research carried out for JPMorgan Fleming found that half of investors planned to hold on to their investments and sit tight for the rest of 2003.

But at the same time they did not plan to put more money into the stock market, despite the current cheap price of shares, while 2% of investors were planning to sell all their shares and go into other types of investment.

Jonathan Watts-Lay, head of UK marketing at JPMorgan Fleming, said: “It is heartening that investors are willing to keep their faith in equities in so far as many more are looking to sit tight than sell out of the market.

“However, the reluctance to invest more money in the stock market even at a time when share valuations are so low suggests that few private investors associate share price falls with buying opportunities.”

:: BMRB questioned 1,000 people between May 2 and 4 for AITC. MarketMinder questioned 662 investors between April 11 and 17 for JPMorgan Fleming.