Special Report: Navigating turbulence

17/07/23  by James Mumberson

Inflation rates have soared globally since the beginning of 2022, causing concern among investors worldwide. The UK has not been immune to this phenomenon, with the consumer price index (CPI) reaching double digits for seven months between September 2022 and March 2023, before easing to 8.7% in May and staying flat in June. To combat rising inflation, central banks have responded by implementing monetary policies, primarily through interest rate hikes. The Bank of England, in particular, has announced 11 consecutive base rate increases since December 2021, raising it from a record-low of 0.1% to 5%.

The Impact on Investors

These measures have had a ripple effect across various financial markets and asset classes, impacting both retail and sophisticated investors. The banking sector has also felt the consequences of inflationary pressures. In March 2023, the collapse of Silicon Valley Bank (SVB) in the US due to liquidity and stability concerns led to HSBC's acquisition of its UK arm, SVB UK, for £1. Additionally, issues at Credit Suisse prompted rival UBS to acquire the bank following emergency talks in late March. These events have evoked memories of the 2008 global financial crisis and have influenced investment decisions, as well as overall confidence in the banking sector and economic policies.

Understanding UK Investors' Responses

To shed light on how UK investors are managing their portfolios in the face of these seismic events, Shojin commissioned an independent research report. The study aimed to explore how investors across the UK are navigating the current economic climate and adapting their strategies in the short and long term. The report includes findings from the study, as well as additional perspectives from Shojin's CEO.

Key Findings and Insights

Our findings suggest that UK investors are navigating the current economic challenges by diversifying their portfolios, reducing reliance on traditional assets, and exploring alternative investment opportunities. As confidence in the banking sector wavers, investors are actively adapting their strategies to mitigate risks and seek inflation-beating returns.

The full report delves deeper into these issues and provides essential insights to help investors adapt their strategies. To access the full report and gain a comprehensive understanding of the research findings, please download the report here