Hargreaves Lansdown confidence index slides

Added 10th November 2016

Hargreaves Lansdown’s Investor Confidence Index reached a low of 59 points in November, its lowest level since the index began in 1995.

Hargreaves Lansdown confidence index slides

Falling 13% on the previous month, it sits two points lower than in March 2008 as Hargreaves suggests investors are concerned about the current “peacock market” – all puff and no substance.

Following a record high of 129 in January 2004, of the 10 worst months in the index’s history, three have been in 2016. This is despite the FTSE All-Share reaching a record high in October and gaining 13% year to date.

HL said: “This divergence is probably down to the widespread concern that central bank policy has distorted asset prices, and has led to a ‘peacock market’, which is all puff and no substance.”

The November HL Investor Confidence Survey was conducted from 1-7 November therefore does not include responses to the US election result.

Senior analyst Laith Khalaf said: “‘So far in 2016 investors have been buffeted by a commodity collapse, the Brexit vote, and most recently the US election, so it is little wonder they are feeling cagey right now.

“The conundrum however is that the stock market and confidence seem to be moving in opposite directions. There is some sense in this because as stock price rise, investors become more wary of a subsequent fall.”

Khalaf said in spite of any investor scepticism of central bank policy, the sotck market is moving upwards and monetary policy looks supportive for the foreseeable future, which he said should help company earnings.

“Times of low confidence can often be opportune moments to enter the market, however daunting that may seem. Meanwhile there are still plenty of options for more cautious investors who want to save for their future.”

HL added that while the stock market may have climbed since the worst days of the global financial crisis, the “wall of worry” still existed.

“The good news is that a wall of worry is preferable to the irrational exuberance witnessed in the late 1990s, and these readings suggest the rise in the stock market may be in part down to loose monetary policy, but it’s certainly not down to animal spirits getting out of control.”

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