UK investors split over prospect of economic recovery

Investors have revealed their uncertainty over the future of the FTSE in a poll conducted by Barclays Stockbrokers, the UK's largest stockbroker.  While nearly two fifths (39%) of those surveyed say the market is too difficult to call at the moment, a third (34%) are bullish believing that recent market rallies are a sign of recovery, whereas three in ten (27%) say they are bearish and do not believe that there will be a market correction.

Recent research into Barclays Stockbrokers clients' ETF trading also reveals how investors are split on the UK's prospects for economic recovery, but are actively seeking returns from the fluctuating markets. Last week Barclays Stockbrokers experienced its busiest trading week for ETFs for the year to date, with volumes increasing 23% week on week.

Trading activity was dominated by two ETFs, firstly the iShares FTSE 100 (ISF), which aims to track the FTSE 100 Index, and the ETFS FTSE 100 Super Short (SUK2), which seeks to deliver the inverse of twice the daily percentage change in the level of the FTSE 100 Index.  These ETFs were in first and second place respectively for both purchases and sales for the week, with purchases of the FTSE 100 Super Short ETF increasing 76% week on week, while in comparison purchases of iShares FTSE 100 increased 10%. 

Barbara-Ann King, Head of Investments at Barclays Stockbrokers said: "The highs and lows of the FTSE in recent months have clearly divided investors when it comes to their outlook for the market, and the UK's economic recovery.  Investors have faced, and are still facing, unprecedented challenges throughout the economic crisis, but are clearly taking it as an opportunity to gain from volatility.

"This has also translated into how clients have been trading ETFs in recently weeks.  Looking at net trading volumes for the iShares FTSE 100 and the ETFS FTSE 100 Super Short (giving double weighting to the Super Short product) clients are closely split in their opinions on the FTSE, but are marginally in favour of the FTSE rising.

"Barclays Stockbrokers ETF data also reveals demand continues to be strong for the iShares MSCI Brazil, with purchases increasing for the fifth consecutive week.  A fifth (21%) of all purchase last week were in Emerging Market ETFs showing how our clients continue to diversify into Emerging Markets in expectation of recovery in that sector."