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Investors look beyond Europe as optimism grows

UK investors looking for stronger returns post-Brexit, are increasingly focusing on the Far East, with Japan and China currently being the most attractive markets for them.

According to new data from City-based bank and brokerage firm Charles Schwab, around 68 per cent of investors, in a recent survey, consider Japan as a good investment destination.

This sentiment has largely been boosted by the Nikkei 225, as it had risen just over 22 per cent in the last six months.

The shift to investing beyond Europe has come with considerable research which showed British investors that China also is a significantly more attractive country for investment compared to a year ago.

Charles Schwab found that China has seen the biggest rise in attractiveness, now appealing to 60 per cent of investors, a jump of 15 per cent since May 2020.

Moreover, the US has also become a more popular investment location, with 67pc of British investors considering it to be a more attractive market after November’s presidential election.

As a result, nearly one in five investors said they had invested more in the US over the last three months.

UK managing director at Charles Schwab, Richard Flynn said: “Faced with sluggish recoveries in UK and European markets, British investors are going global, turning to Japan, China and the US for higher returns.” Flynn said that investors are more likely to look abroad for opportunities as their optimism increases.

More than half of UK investors — 53 per cent — are optimistic about the outlook for global markets in the next 18 months.

This represents an eight percentage-point increase compared to May 2020, Charles Schwab found. In addition, almost half of investors have seen an increase in the value of their investments in the last three months.

Again, this represents an improvement from May 2020 when just 29 per cent had seen a rise in the value of their investments.

“We’re seeing British investors becoming more bullish as the performance of their portfolios improves’’, Flynn commented.

“The combination of a strong bounce back in the Far East coupled with confidence in the Biden administration, positions these markets as the Big Three outside of the UK for investors’’, he added.

As a result of this increased optimism, more than three-quarters of investors, or 77 per cent, see current conditions as a good opportunity to invest in undervalued assets.

Real Estate is now considered a good option by 69 per cent of UK investors, increasing from 60 per cent a year ago.

The tourism and hospitality sectors have also become more popular, as 40 per cent of investors view the sector as attractive.

This represents a five percentage-point increase from last year, with the end of lockdown coming into sight. “Investors are now looking for green shoots of recovery in some of the sectors which were hit hardest by the impact of the pandemic’’, Flynn said.

“As we get closer to the end of lockdown, many investors are viewing these sectors as potentially undervalued and due for a rapid bounce back’’, he added.

Not every sector that suffered during the pandemic has seen a rise in popularity. Only 35 per cent of investors consider high street retail as an investment opportunity, falling from 37 per cent in May 2020.

Despite the more positive outlook, investors are still concerned about the impact of the pandemic, which could mean they will be more cautious about future investments.

“Fears of a new Covid variant or a future pandemic continue to weigh on investors’ minds’’, Flynn said, pointing out that the current volatile conditions remain a challenge for most investors. (The writer is our foreign correspondent based in the UK).

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