Investor confidence takes a knock in June but crypto craze fuels interest in Bitcoin miner

canary wharf

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown shares her thoughts with Business Leader about the current state of the investor market in the UK.

With travel corridors staying shut and bolted and the easing of lockdown restrictions delayed, investor confidence in regions around the world has taken a hit.

The HL monthly survey shows investor confidence in the UK and Europe fell by 4% back to levels seen in April, as uncertainty swirled around the trajectory of the Delta variant and what it would mean for the recovery.

Although this is a small sample of the HL client base, the survey mirrors the hesitancy of the FTSE 100. It was following a two step forward, one step back dance for much of June until it saw stronger gains over the last few days.

Japan suffered the biggest drop in confidence, with a fall of 6%, as concerns about economic prospects in the country rise due to the low take up of vaccines.

Confidence in North America also fell back by 3%. The region is seeing a strong rebound in growth but concerns about the impact of higher prices appear to be hanging over investors. However, few seem to believe that higher rates of inflation will be sustained. Although confidence that interest rates will be higher in the short to mid-term has risen, it has dropped for the longer term horizon.

Argo Blockchain has seen a flurry of interest across social media which is likely to have help propel it into the top of the stocks for June . The Bitcoin mining company already uses hydro-electric power in two huge data centres in Canada for its proof of work to earn bitcoins and may have seen renewed interest given Elon Musk’s comments surrounding the need for the crypto currency to be less energy intensive.

The company has joined the Bitcoin Mining Council which was set up to improve sustainable practices, after Elon Musk’s call to decarbonise the crypto world. It plans to accelerate its use of greener energy and has been involved in the launch of the first Bitcoin mining pool powered exclusively by clean energy. But given the volatile nature of cryptocurrencies, investing in in crypto-miners should still be considered high risk and only undertaken within a well-diversified portfolio.

Gaming retailer, GameStop has been one of the most popular shares in June. This appears to be a hangover from the revenge saga which played out earlier in the year when GameStop was one of the stocks targeted by an army of retail investors, in a bid to create big losses for short sellers.

With uncertainty rearing its head again, there appears to be more appetite for defensive stocks like National Grid. Its full year results showed a lower than expected impact from Covid and its strategy shift towards electricity is now underway with the purchase of Western Power Distribution.

Lloyds Banking Group is a regular favourite pick among investors and there is some expectation that the red hot mortgage market will have helped the bank increase profitability, despite low net interest margins. Housebuilder Taylor Wimpey has been in demand with some expectation that its bold move in scooping up cheaper plots during the pandemic should help it build revenues at a time when there is a race for space in the property market.

Aviva was also a popular buy among investors this month, as activist investors target the company with a demand for more dispersals of assets and an increase in returns for investors.

There has been a global shift into smaller stocks fuelled by growing confidence following vaccine breakthroughs and roll-outs, leading to a higher appetite for risk.

This has played out in June so far with the Fidelity UK Smaller Companies and the Marlborough UK Micro-Cap Growth among the most popular funds in June.

Baillie Gifford American remains hugely popular among clients. It has delivered a stellar performance due to its investments in the consumer discretionary and technology sectors. Although the fund has had a very strong performance over the past year, this is a short timeframe, so investors should consider this performance in the context of a longer time horizon and not in isolation.