Ben Wright, co-head of UK investment banking at Berenberg, said: 'The UK is firmly back on the radar for global investors, who are signalling a clear intent to increase their exposure relative to most other European markets.' Credit: iStock
Global investors have started to show increased optimism about UK equities and earnings expectations, and a growing appetite for IPO participation, according to Berenberg’s inaugural Investor Barometer.
The survey – conducted before the start of the conflict in Iran – revealed that more than one third (38%) of global investors expect to increase their UK equities exposure over the next 12 months, with 51% intending to remain neutral and just 11% looking to reduce it.
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Among global and pan-European mandated investors actively adjusting their UK allocation, 77% planned to increase their exposure to UK equities and 23% wanted to decrease it.
Investor sentiment was also notably upbeat about earnings expectations, with nearly half (46%) expecting earnings to beat consensus over the next 12 months, while only 11% foresaw misses, and 44% expected in-line results.
Ben Wright, co-head of UK investment banking at Berenberg, said: "The UK is firmly back on the radar for global investors, who are signalling a clear intent to increase their exposure relative to most other European markets.
"They are not just warming to the UK; they are actively reallocating towards it, and UK companies should be actively engaging to capture the allocations," he continued.
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Survey participants urged UK corporates to be more ambitious on M&A, with roughly two-thirds saying they wanted boards to prioritise accretive acquisitions, making investors six times more likely to support than oppose this approach.
A perceived limited supply of high-quality companies coming to market was also identified as a key constraint; 63% of investors expected UK IPO activity to increase over the next 12 months and more than 70% noted an appetite to participate.
Elsewhere, despite 67% of investors expecting modest UK economic growth, 51% cited government missteps and political uncertainty as the top risks to UK GDP, roughly three times more than any other risk.
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At the time, investors were less worried about macroeconomic factors such as inflation, labour market constraints and currency volatility, which collectively accounted for just 7% of responses.
"Investors are clear that political uncertainty remains the biggest threat to GDP growth. There is a genuine window for the UK to regain ground in global portfolios, but maintaining policy consistency will be critical to turning this momentum into lasting advantage," explained Wright.
