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Investors less optimistic about growth following Brexit — survey

Institutional investors are less confident regarding the U.K.'s departure from the European Union, with a fall in the proportion of respondents expecting positive global economic growth in the near to medium term, according to State Street Corp. (STT)

The firm's latest Brexometer index, a quarterly survey of institutional investors, found 40% of respondents expect positive growth in the next three to five years, compared with 45.1% of respondents in the previous survey.

The proportion of investors expecting Brexit to have an impact on their business operating models grew to 82% from 72% in the third-quarter survey. Some 22% think Brexit will have a significant impact, vs. 17% in the previous survey.

For asset allocation, 60% of investors expect it to stay the same, up from 53.4% in the last survey. Regarding investment risk, 27.3% expect asset owners to decrease their levels of investment risk over the next three to five years, down from 35.9% in the third-quarter survey.

"The clock continues to tick on Brexit, but there remains limited evidence that financial markets or their participants are discounting a worst-case outcome," said Michael Metcalfe, head of global macro strategy at State Street Global Markets, in a statement accompanying the survey report. "Our metrics suggest that the majority of investors still have no immediate plans to change their holdings of U.K. assets. This has not changed even though the Bank of England is expected to reverse its precautionary interest-rate reduction this month and sterling's undervaluation has halved over the quarter."

The report is available on State Street's website. The fourth-quarter survey was conducted between Sept. 27 and Oct. 10. Respondents comprised 100 institutional and alternative investors.