State Street Quarterly Brexometer Index Reveals Latest Investor Sentiment towards Brexit

Thursday, July 13, 2017 10:52 am EDT

Dateline:

LONDON, July 13, 2017

Public Company Information:

NYSE:
STT
"Policy uncertainty will likely remain elevated due to political shifts globally. In fact, the Global Economic Policy Uncertainty Index is higher than during the global financial crisis and Brexit remains a significant source of this uncertainty following the UK’s hung parliament vote in June."

State Street Corporation (NYSE: STT) today launched the latest findings from its Brexometer Index, a quarterly pulse survey of institutional investor sentiment about the UK’s departure from the European Union.

The Q3 2017 survey1 indicates a gradual rise in confidence, with 45 percent of respondents expecting positive global economic growth in the near-medium term (three to five years); a 13 percent increase since Q4 20162.

In addition, 33 percent believe asset owners will increase their level of investment risk over the next three to five years, a seven percent rise since Q4 2016. There has also been a modest increase in appetite for UK assets with 16 percent planning to gain a greater exposure over the next six months, a three percent rise since Q1 20173.

Outside of this, whilst the majority (72 percent) feel Brexit will impact their business, this figure is down by seven percent versus Q2 20174.

Michael Metcalfe, head of Global Macro Strategy at State Street Global Markets said, “March 2019 is a quarter closer, but neither the UK election nor the beginning of Brexit negotiations have narrowed down what is likely to happen. If anything the possible outcomes have widened not narrowed. The loss of a Conservative majority in parliament and the need to partner with the Democratic Unionist Party (DUP) has raised hopes of a softer version of Brexit, but at the same time raised the possibility of political deadlock or no deal.

“This wider range of possibilities certainly appears to have impacted our survey this quarter, the share of respondents suggesting they would increase their exposure to UK financial assets increased by 3 percent to 16 percent, but the share suggesting they would reduce their holdings also rose by 2 percent to 20 percent.

“Importantly, the balance is still positive; more investors still plan to increase their holdings of UK assets, there is still no evidence of capital flight from UK assets. But it is testimony to the continued level of uncertainty over Brexit that the opinion amongst these respondents is getting more divided not less as the deadline nears.”

Bill Street, head of investments for EMEA at State Street Global Advisors commented, “Policy uncertainty will likely remain elevated due to political shifts globally. In fact, the Global Economic Policy Uncertainty Index is higher than during the global financial crisis and Brexit remains a significant source of this uncertainty following the UK’s hung parliament vote in June.

“Turning to sterling specifically, the market seems content that a level of 1.18–1.22 reflects an appropriate discount to reflect Brexit risk. However, near the top of the recent 1.22–1.30 range the prospects for sterling appear biased lower. UK manufacturing production and retail sales have been consistently weaker in 2017 and we expect the first six months of direct negotiations with the European Union to be contentious, suggesting a lower currency. Any move higher will likely be delayed until there is greater clarity.”

To view the full research report, click here.

1 State Street Brexometer Index is a quarterly survey conducted by PollRight on behalf of State Street. For the Q3 2017 survey, 103 institutional investors participated globally during June 2017 and July 2017. 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 Q4 2016 survey, 161 institutional investors participated globally during September 2016.

3 For the Q1 2017 survey, 111 institutional investors participated globally during December 2016 and January 2017.

4 For the Q2 2017 survey, 101 institutional investors participated globally during March 2017 and April 2017.

 

About State Street

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 $29.83 trillion in assets under custody and administration and $2.56 trillion* in assets under management as of March 31, 2017, 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

* AUM reflects approximately $33.30 billion (as of March 31, 2017) with respect to which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.

Marketing Communication

For Professional Clients Use Only.

The information provided does not constitute investment advice as such term is defined under the Markets in Financial Instruments Directive (2004/39/EC) or applicable Swiss regulation and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell any investment. It does not take into account any investor's or potential investor’s particular investment objectives, strategies, tax status, risk appetite or investment horizon. If you require investment advice you should consult your tax and financial or other professional advisor.

All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street shall have no liability for decisions based on such information.

The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Corporation’s express written consent.

© 2017 State Street Corporation - All Rights Reserved

Expiration date: 31/07/2018

CORP-3129

Media Contacts

Contact a member of the State Street Media Relations Team.

Social Media

State Street on the App Store

Business Wire NewsHQ℠