Transaction volumes on the London Stock Exchange (LSE) were down by almost 25 per cent in the first half of 2019 compared to the same period in 2018, with The Share Centre blaming the drop on Brexit uncertainty.

Research from the organisation found that two fifths of consumers believe the UK should leave the bloc on 31 October even without a deal, despite some 57 per cent of the mindset that a hard Brexit will have a negative impact on investments.

Less than one in three personal investors are planning to, or already have, changed their investment portfolios or behaviour, meaning that over two thirds are, in essence, holding what they already own or are waiting until the uncertainty settles to make new investment decisions. According to The Share Centre, this is partly driving the lack of market activity evident in the LSE volumes.

However, the stock market has risen strongly since the financial crash in 2008. Even since the EU referendum the market has risen sharply, up over one fifth (20 per cent) since June 2016. Despite this, the trend of a rising market has stalled in recent times, with the market now flat when compared to the time of the last General Election in 2017.

When asked about their expectations for the rest of the year, a significant majority (73 per cent) of personal investors stated the market will end the year below current levels.

A number of issues in recent times have dented investor confidence in markets. These include the special administration of Beaufort Securities which led to investors being locked out of their accounts for many months, and more recently the issues surrounding the Woodford Equity Income Fund.

When asked, over three quarters (78%) said issues such as the suspension of the Woodford Equity Income Fund had undermined trust in financial services. Even more critically, over one in four (27%) indicated the issues had made them less confident when making investments.

Commenting on the findings, The Share Centre chief executive Richard Stone said: “The findings from our research coupled with market data published by the LSE shows how challenged personal investor sentiment currently is. Whether impacted by Brexit uncertainty, the seeming end of a bull run or recent issues within the financial services sector; personal investor confidence needs to be rebuilt.”

In its findings, the Share Centre revealed that 58 per cent of personal investors have expressed a want for the new Prime Minister, Boris Johnson, to increase tax free savings and investments thresholds, while 37 per cent called for reductions to capital gains tax.

Furthermore, 44 per cent want Johnson to do more to encourage wider share ownership and almost one third want more done to promote social impact investing.

“believe these points to be fundamental,” Stone added. “Since the financial crisis there has been a dramatic fall in the number of quoted companies and returns have been concentrated in the hands of private capital and those able to borrow at low rates of interest.”

The Share Centre chief executive urged the new Prime Minister to take steps to “inspire wider participation in capital markets”, while encouraging companies to take active roles in enabling employees and customers to become shareholders.

“Reforming Company Law to make Part 9 of the Companies Act 2006 which enfranchises nominee shareholders compulsory on all companies and brokers would be one such measure, encouraging personal investors to engage with their investments,” he concluded.

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