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The firm surveyed 101 of its institutional clients in the immediate aftermath of the UK triggering Article 50 of the EU constitution, which confirmed its intention to leave the bloc.
One fifth (19%) of investors said they planned to reduce their UK holdings in the next six months, up from the 16% recorded at the start of the year. However, the majority – nearly two thirds (64%) – did not envisage changing their UK allocations.
Sentiment was marginally more positive quarter-on-quarter, State Street reported. More than a third (35%) of investors said they were positive about global economic growth on a three to five year view, up from 33% at the start of the year. Just 11% said they had a negative outlook, compared to 19% who were bearish on medium-term prospects in January.
With the UK general election on 8 June having delayed the start of formal exit negotiations with the EU, there is little certainty about the impact of regulatory changes on the financial sector.
However, some businesses are already envisaging operational changes. Almost a third (31%) of the investors surveyed said it was either “moderately likely” or “very likely” that they would reduce their operational or organisational presence in the UK.
“The beginning of Brexit would appear to have done little to dent the confidence of long-term investors in the UK,” Metcalfe said. “The question now is whether that will last as actual Brexit takes shape during the negotiation process.”