State Street Quarterly Brexometer Index Reveals Latest Investor Sentiment towards Brexit

Wednesday, May 30, 2018 10:42 am EDT

Dateline:

LONDON

Public Company Information:

NYSE:
STT
"The survey reflects a period when optimism regarding Brexit (and sterling) was near its peak"

LONDON, May 30, 2018 State Street Corporation (NYSE: STT) today launched the latest findings from its Brexometer Index, a quarterly pulse survey of institutional investor sentiment on the economic impact of Brexit.

The Q2 2018 survey1 indicates that the number of institutional investors looking to decrease their holdings of UK assets fell to a record low of 14 percent, a 10 percent decrease from a record high of 24 percent in Q1 20182.

“The survey reflects a period when optimism regarding Brexit (and sterling) was near its peak,” said Michael Metcalfe, head of Global Macro Strategy at State Street Global Markets. “Investors were less optimistic as a whole, but less pessimistic on their UK asset holdings. The test now will be whether that holds as the practicalities, political and otherwise, of a softer Brexit are fleshed out.”  

As a result of this overall fall in optimism, survey respondents looking to maintain their current allocation increased to a record high of 72 percent, eclipsing the previous record of 64 percent in Q2 20173.

In addition, despite a sharp increase in positive outlook for the global economy between Q4 20174 and Q1 2018, when investors with a positive outlook grew from 40 percent to 55 percent, sentiment has now fallen to 36 percent. Consequently, the number of investors with a negative outlook for global economic growth grew to a record 23 percent.

Other key findings of the Q2 2018 index include:

  • More than one-third (34%) of institutional investors believe asset owners will decrease their level of investment risk over the next three to five years, up 6% since Q1, 2018

  • 31% of respondents believe regulatory reporting, such as that required under Solvency II and AIFMD, remain the area that businesses will need the greatest help with following Brexit

  • 18% of respondents anticipate Brexit to have no impact on their business operating model, up 7% from the first quarter

  • 17% of institutional investors believe performance and risk analytics is one of the key areas that businesses will need the greatest help with following Brexit, up 8% since Q2, 2017

“Sterling remains undervalued against most currencies,” said Bill Street, head of investments for EMEA at State Street Global Advisors. “It strengthened during March and early April on expectations of a rates increase, but retreated again, on the back of economic data and guidance from the Governor of the Bank of England. We do however expect a rate hike, most likely in August, although, the data will need to improve.”

View the full Brexit research report to understand its economic impact.

 

1 State Street Brexometer Index is a quarterly survey conducted by PollRight on behalf of State Street. For the Q2 2018 survey, 102 institutional investors participated globally during 28th March 2018 and 20th April 2018. The research will be conducted on a quarterly basis using the same questions and database to best measure how sentiment towards Brexit is evolving.

2 For the Q1 2018 survey, 102 institutional investors participated globally during 8th January 2018 and 26th January 2018.

3 For the Q2 2017 survey, 101 institutional investors participated globally during June 2017 and July 2017.

4 For the Q4 2017 survey, 100 institutional investors participated globally during September 2017 and October 2017.

About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $33.30 trillion in assets under custody and administration and $2.70 trillion* in assets under management as of March 31, 2018, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s website at www.statestreet.com.

*Assets under management include the assets (approximately $36 billion as of March 31, 2018), for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.

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State Street Corporation, One Lincoln Street, Boston, MA 02111-2900

The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU) or applicable Swiss regulation. This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.

State Street is not affiliated with PollRight.

Investing involves risk including the risk of loss of principal.

Contact:

Alice Westwell
+44 203 395 2673
AWestwell@StateStreet.com
@StateStreet

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