(Bloomberg) -- The bad news keeps coming for UK stocks, with investors still more bearish on the country’s equities than any other major region, a Bank of America Corp survey showed.
A net 18% of fund managers are underweight British equities, according to BofA’s global survey of fund managers in December. While that’s an improvement from last month’s figure, when 25% were underweight, it still leaves the UK’s stocks more disliked than those in the US, the euro-area and Japan.
Domestic UK stocks have long been out of favor because of Britain’s lackluster economy, while this year’s runaway inflation and energy crisis have made things even worse. But exposure to the country’s equities really collapsed in September, according to BofA’s poll, after former Prime Minister Liz Truss’s unfunded tax cuts destroyed investor confidence and fueled a sharp selloff in British assets.
The BofA findings come as London struggles to maintain its status as a global financial center since Brexit. The UK capital briefly lost the title of Europe’s biggest stock market to Paris last month, while London’s share of proceeds from European initial public offerings is at its lowest since 2009.
Still, things may be stabilizing after a tumultuous year that saw the resignation of two prime ministers. Under new leader Rishi Sunak — who reversed almost all of the policies of his predecessor — UK equities have rebounded along with global peers in recent weeks.
The large-cap FTSE 100 index is up 0.9% year-to-date, boosted by exposure to energy and defensive sectors like staple goods, and a strengthening dollar. The domestically-focused FTSE 250 midcap index is down 20% and headed for its biggest annual decline since the global financial crisis.