Survey Reveals Private Investors Have More Confidence in the Stock Market

LONDON, ENGLAND, March 22, 2012 (Press-News.org) A new survey commissioned by Lloyds TSB Private Banking has found the highest level of equity investment at any time in the past three and a half years.

- The Investor Outlook survey by Lloyds TSB reveals investors have more in equities than at any time in the last three and a half years
- Equities are good value after a period of price weakness
- After months of risk-aversion, investors have more faith in stock market

The Investor Outlook survey by Lloyds TSB Private Banking, a provider of international wealth management services, has revealed that private investors (on average) have more money invested in the stock market than at any time in the last three and a half years(1). This is despite weak sentiment for equities and continuous concern about the state of the economy.

According to the research, many investors think stocks are good value after a period of weakness and are starting to invest once again. This suggests many have become frustrated with real cash returns as saving rates remain low against a background of high inflation.

The 1,000 private investors surveyed by Lloyds TSB Private Banking now have on average GBP27,900 invested in equities excluding their pension - an increase of GBP2,300 in the last year. The figures are GBP27,948 invested on average, per investor surveyed in equities in Jan 2012; GBP25,686 in Dec 2010. This is despite the FTSE 100 having fallen over this time, thereby eroding their capital. Investors have not had a greater exposure to the stock market since Lloyds TSB Private Banking began the twice-yearly survey in July 2008.

Private investors now have more confidence in equities, with 29 per cent saying they feel positive about the stock market over the next year - compared to just 25 per cent in the last survey six months ago. Nevertheless, many investors are still worried about the stock market, and increasingly so, with 43 per cent saying they feel apprehensive about equities in the next 12 months compared to 40 per cent in the last survey.

Despite the reservations of some, many investors are confident in stock market investments because they believe equities are undervalued after a prolonged period of price weakness. 51 per cent of people who say they have faith in the stock market hold this as a reason, while only 42 per cent say their confidence is born of a wider, positive market sentiment towards equities. Only 34 per cent say the fundamentals of the UK economy being better than suggested is a key reason for their confidence.

The research by Lloyds TSB Private Banking Group also revealed many investors are resigned to potential capital erosion in their savings. Some 56 per cent are expecting inflation to run higher than their savings account interest rates over the next 12 months, meaning a financial loss in real terms. This frustration may provide another reason for investors to look towards other asset classes such as equities for potentially better returns.

"After months of profound risk-aversion many investors are now more freely testing the waters of the stock market while not plunging in," said Ash Misra, Head of Investments, Lloyds TSB Private Banking. "Confidence in equities among most investors is still fairly weak," he continued, "but the tide of sentiment has turned to the positive, at least for the time being. Looking out to the rest of 2012 our current outlook for equity markets is cautiously optimistic." Mr Misra went on to say that investor sentiment is now at near multi-year lows, with equity valuations at attractive levels, especially for those in developed markets. This, he explained would be particularly relative to fixed interest asset classes.

"With this backdrop," he concluded, "so long as the trend of policy accommodation by central banks continues it should be supportive of equity price appreciation. Our analysis indicates that the balance of probabilities certainly favours price appreciation more strongly now than this time last year."

Private investors should always remember that nothing is guaranteed and that past performance should not be seen as an indicator for the future.

The opinions expressed are that of our current, in-house, view and are subject to change.

All statistics unless otherwise stated are from Lloyds TSB Private Banking's Investor Outlook survey. The survey of 1,000 private investors was conducted online by Research Plus Ltd, on behalf of Lloyds TSB Private Banking, 12-20 January 2012.

The opinions expressed are that of our current, in-house, view and are subject to change.

1 (GBP27,948 invested on average per investor surveyed in equities in Jan 2012; GBP25, 058 in July 2011; GBP25,686 in Dec 2010, GBP24,013 June 2010, GBP26,737 December 2009, GBP27,843 July 2009, GBP23,623 December 2008 and GBP22,531 July 2008)

Notes to editors:
1,000 private investors were surveyed online, 12-20 January 2012, by Research Plus Ltd on behalf of Lloyds TSB Private Banking.

The criteria to define the sample are those who hold/held any one of the following types of investments: stocks and shares, non-cash ISA (Maxi ISA), investment trusts (excluding PEPs/ISAs), PEPs (including unit/investment trust PEPs), unit trust/OEIC (excluding PEPs/ISAs), Guaranteed Stock Market Bonds (GSMB), corporate bonds (including ISA), investment bonds, gilts / gilt funds, other government bonds and government bond funds. This is the ninth time the half-yearly survey has been conducted. To ensure consistency between waves, the relative proportions of the above types of investors are monitored, along with gender, age and location, to avoid a skewed sample.

About Lloyds TSB Private Banking Limited
Lloyds TSB Private Banking Limited was established in 1986. We offer a range of expert solutions in banking, savings and investments, insurance, tax and retirement planning. Lloyds TSB Private Banking Limited is part of the Lloyds Banking Group. Lloyds TSB Group plc was renamed Lloyds Banking Group plc on 19 January 2009 following the acquisition of HBOS plc, and is now the largest retail banking group in the UK.

Lloyds TSB Private Banking Limited. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2019697. Authorised and regulated by the Financial Services Authority

Website: http://www.lloydstsb-pb.com