Investing has been one of the most unpredictable aspects of 2020 for many concerned with everything from a sophisticated portfolio to a workplace pension. The stock market crash at the start of the lockdown and continued economic disruption has left many wondering what the future will hold, while soaring tech stocks have added further complexity to an ever changing market.
Whilst the pandemic may be far from over, news of Pfizer’s successful vaccine trial has provided hope to businesses throughout the UK that the end is in sight. In response to Pfizer’s vaccine results, the FTSE 100 rocketed, with the blue-chip index climbing 5.53 per cent to 6,236.93, and the midcap FTSE 250 climbing 5.43 per cent to 18,890.32. This suggests that investor sentiments have surged, sending markets to strongly positive levels.
Now, with the success of the Pfizer vaccine and some form of normality on the horizon, investors are looking to back British businesses, with 44% now looking to back UK-based companies rather than global firms. Private capital has proven to be fundamental in helping UK businesses grow and flourish post-pandemic, and will be a welcomed sight for many SMEs across the UK.
The overall effect of this period has led investors to reconsider what they are doing with their investable assets. To understand this shift, SME investment specialist IW Capital has conducted nationally representative research to uncover the sentiments of the UK’s investors.
- 44% of investors are now looking to back UK-based companies rather than global firms – 9,629,000
- 45% of investors feel their ‘risk-appetite’ has increased due to Covid-19, as traditionally safe investments in big companies are no longer viable – 6,942,000
- 27% of investors are looking to invest in sectors created by the Covid-19 pandemic, such as PPE, social distancing equipment and virtual solutions – 5,674,000
- 19% of investors believe the coronavirus pandemic has opened more investment opportunities than it has closed – 6,278,000
CEO of IW Capital, Luke Davis said,“Investing and investing wisely has never been easy by any stretch but this year has been particularly difficult for investors at every level. Every economic shift in history has resulted in winners and losers but seldom has a whole asset class been as swiftly affected as we have seen in government bonds for example.
“Now with news of a vaccine, investors are looking to back UK-based companies over global firms, which truly is great news for SMEs and small business owners throughout the nation. Such use of private capital is sure to see growth for many SMEs, with now being a key time for investment. This demonstrates the sentiment that already exists to help get the UK economy back on its feet and once again a hub for business.
“One area that we have seen do well is investment into small, UK-based businesses. Especially those in the so-called “Covid asset class”, firms that have adapted to current environments by shifting online, moving into PPE production or offering virtual solutions to the problems brought about by new restrictions.
“This is an area that we have seen tremendous demand for from investors since April. After an initial period of fear and uncertainty the opportunities started to arise and investors have looked to back them, especially across the UK and outside London.
“Making growth investment more easily available to small businesses that are looking to grow should be a priority. The last time that the Government-backed EIS was extended, it resulted in a significant jump in private investment into small businesses. Replicating this effect with new, or increased, incentives would provide a much needed boost to a section of the economy that is most in need, and so we hope this will be addressed in the near future.”