Short term investors on the side-lines as Brexit vote nears

Added 9th June 2016

Deals made by short term investors have decreased by 12% year-on-year ahead of Britain’s European Union referendum, according to The Share Centre.

Short term investors on the side-lines as Brexit vote nears

Meanwhile, the value of deals has increased by 14% year-on-year. “It is difficult to for us to put a finger on why this may be”, said Helal Miah, investment research analyst at The Share Centre. “Our assumption is that it could be that bigger, value investors, who have put money aside over the last couple of years, are reinvesting it back into the market. While those smaller, active, short term traders could be staying on the side-lines due to the uncertainty,” added Miah.

The Share Centre examined investor activity in May 2015 and compared it with May 2016 to see how the upcoming referendum is affecting investment.

The data showed that the top traded companies’ year on year have changed significantly, noted Miah. In May 2015 they were Lloyds, GlaxoSmithKline, New World Oil & Gas, Taylor Wimpey and Royal Dutch Shell - indicating that investors were looking for companies with good yield potential and geared more towards income.

In May 2016 however, Lloyds, Glencore, Highlands Natural Resources, Royal Dutch Shell and Barclays made up The Share Centre's five most traded companies.

“In May this year, it seems as though investors are taking a completely different approach, seeking companies in recovery and perhaps a little out of favour. Four of the five are under pressure however, the fact that they still provide a little bit of income could be a reason investors are taking a punt," explained Miah.

The analyst added: “Over the next two weeks, the market is likely to trend sideways. Our advice to investors would be to stay put, not to make rash decisions, but leave some cash on the side-lines for buying opportunities.”

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